tuesday, february 4th, 2025. and squawk box begins right now. good morning everybody and welcome to squawk box right here on cnbc. we're live from the. nasdaq market site in times square. i'm becky quick along with mike santoli and steve liesman joe. >> and andrew are. >> both out today. >> guys it's good to see both of you. >> thank you. good to be here. >> with you. >> let's take a look at what's. >> been happening with. >> the u.s. equity futures at this hour. >> you're going to see. >> there are red arrows. indicating to the open, at least. >> at this point, with. >> the dow indicated. >> off by about 85 points. >> s&p futures. >> off by seven. the nasdaq down by eight. this comes after declines across the. >> board for all of. >> the major.

>> averages yesterday. >> but those declines. >> were paired. >> pretty massively. freely through the. >> course of the day. >> we were talking about declines. >> of something. >> like 48 points or 46 points for the s&p 500. the dow. down by just 123 at. >> the end. >> of the session. the nasdaq. >> down by a couple. >> of hundred points. >> versus what we had. >> seen in the premarket. >> yeah, we were. >> all down about. percent and a half on the s&p 500. even more than that, just about an hour. >> after the close, you. >> got the news perhaps that there was going to be a deferral of the. >> mexican tariffs. >> and immediately we rallied. >> more. >> than 1% intraday. so the market was very alert to the possibility that this is going to swing in both directions based on headlines. you know, yesterday when i. >> was talking. >> to you at 8 a.m, i said, you know, it's kind of a. muted response initially pre-market because everyone recognizes that there's a fluid situation. >> so that's. >> how the. >> market traded bond. >> market rallied initially. and then. >> yields kind of ticked higher. >> again you got a strong ism number in there too. >> so that got obscured. so you know essentially the market. >> is. >> waiting for the next the.

next beat in this tune. but not really sure exactly. >> whether they want to front run it. >> right. we'll see. 30 days was. >> the reprieve. >> that was given. we did see the 10% tariffs. >> kick in. for china. >> and we'll. >> talk more about that in just a moment. >> but you can see. >> how it's been playing. >> out in the treasury market the ten. >> year right. >> now yielding 456. the two years at 425. the mexican peso and the canadian. dollar both rebounding. let's take a look at this chart that shows. >> the dollar. >> strength just in terms of what. >> we've. >> been watching here. >> the dollar. >> strength dropping back to levels from about a week ago. but you. >> do see that. >> the peso. >> is the dollar. the dollar. >> what am i reading here. >> what is this. >> the dollar was up yesterday. >> yeah. >> this is the. >> dollar relative to those currencies. >> and so. >> that's exactly back to. where we saw it. at one point. >> it was down about. 2% against the. >> peso yesterday. now we see it. >> or it was up against. >> 2% against. >> the peso. >> now you see it kind of back to those levels. >> also let's. >> take a look at bitcoin. >> right now.

>> bitcoin is. >> back at about 98,000. almost 99,000 98,943. >> it's down about 2.6%. >> but we. >> had seen it as high as 105,000 before. >> we saw all of this. >> concern. >> about the tariffs and the pressures that that put on. >> the market. >> and as low as 92. >> or 93. >> yesterday morning. so obviously, this is one of the kind. of sentiment gauges that. >> the dial gets turned. >> pretty pretty quickly. >> new overnight president trump's. >> 10% tariff on. >> china took effect. >> and. >> china announced retaliatory measures. eunice yoon. >> joins us. >> now from beijing. >> to detail those. hello, eunice. >> hey, guys. well, china raised the stakes. it announced a raft. >> of countermeasures, 10 to. >> 15%. >> tariffs on energy. >> imports, farm gear. >> and trucks. >> export curbs on tungsten. >> and other. >> rare metals. an antitrust. >> probe on. >> google and then blacklisting. >> pvh, which is the owner of. >> the. >> tommy hilfiger brand and calvin. >> klein brand. >> as well as. >> genetics company illumina. >> now, the impact of each measure varies. it is overall, though relatively modest. >> for example. >> the us accounts for. 5.4% of

china's lng purchases. the google search engine is blocked here. >> us companies also. >> ship a very limited number of. >> farm equipment, as. well as big. engine sedans to china. >> even so. >> this move. >> today is really seen as a way for china to gain leverage on president trump. if there is indeed some sort of. larger trade deal. >> and, eunice, you know, that clearly seems to be the takeaway that, as you say, these are relatively, you know, measured and selective measures that china has put on here. what do we think the terms of any negotiation might be? obviously, the sort of cover for the, you know, proposed mexico and canada tariffs were mostly about fentanyl at the border. is that going to be, you know, where things come together here, or is there something more that we're going to have to be mindful of? >> well, i think that it looks as though the. discussions with

the. mexican president, as well as the canadian, canada's. justin trudeau, were mainly about fentanyl. and so from chinese perspective, china's perspective, they've already said again today that fentanyl is the us's problem. and i think what you're seeing is that unlike canada and. >> mexico. >> canada does. china does not feel that it is in a position. and the ccp, as well as president xi jinping, is not in a position to really. look as though they are caving in. >> to the west. >> they are. >> loathe to that. >> they want to make sure that president xi looks as though he is always in control. in any discussion with. president trump. so a lot of this, these measures that we're seeing now, i would think would appear to be a way for china to leverage against president trump in any discussion for a larger economic bargain. eunice, why. >> these companies that are kind of being. >> singled out? it doesn't make. >> sense. >> at.

>> least. >> from our perspective. is there anything you. can see for. >> making rhyme or. reason of why. >> those companies were selected? >> i think that it's probably because they don't actually have that much business here. they're they're not, you know, it's not super meaningful. i mean, for google, for example, like i said, there is no search engine here for google. they have 1% of global sales in china. so there is some business here. but for a pvh we've already seen that investigation announced. illumina is a new one. but they have a relatively small business here though they have been growing. so we could see that they are selecting companies that have some exposure here but wouldn't necessarily rock the boat, but still would provide a way for china to be able to say, well, you know, i'll allow some, you know, more sales of, of one particular item or another if you, you know, give in on, on some something else that preferably that china would want to see from the united states, such as lifting of export controls. >> or to the like.

>> eunice, i know this. >> is a hard. >> question to answer, but can you tell me, after what just happened with canada and mexico, does president trump look stronger or weaker, or about the same to the leaders in china? or is it a very different situation in that this is china and the politics are. just so different domestically here in. >> the united states? >> well. >> i think it's probably about the same. my guess is that from what we saw here and the reaction generally here to the 10% tariff, it was really one of relief for the most part from manufacturers who we spoke to, but also potentially from from the way the government was reacting, because this looks as though it's a friendlier white house to the chinese that you saw that president xi and president trump had had a conversation that the chinese were invited to the inauguration. so the vp was meeting with jd vance, you know, so overall, it's been kind of

friendly. and then when it was 10%, it was seen as well. wow, that's pretty good. it wasn't the 60% that was promised on the campaign trail. and so, so i don't necessarily think that the that anything really changed from, you know, from this particular announcement. >> all right, eunice. >> we will see see what changes are to come. i appreciate the update. thank you. >> okay. now for a look at where things stand with trump's tariffs on mexico and canada. and for the answer to the all important question, what just happened? we turn to megan cassella in washington. megan. >> that is the question this morning steve. good morning. both countries both canada and mexico getting at least a temporary reprieve from a trade fight after both struck deals with trump yesterday to delay their. tariffs by at least 30 days. >> so first mexico. >> this one came together pretty quickly. >> yesterday after. >> mexican president claudia. >> sheinbaum, she. >> pledged to send 10,000. >> troops to the southern.

>> border to focus. >> on fentanyl specifically. >> trump agreed then to delay tariffs. >> until march. >> 4th and says that marco. >> rubio, scott. >> bessent and howard. >> lutnick will. >> continue negotiations. in the meantime. >> he had a. >> little. >> bit of a trickier time with canada. trump and prime minister. >> trudeau spoke twice yesterday, and it. >> wasn't until. >> that second call later in the afternoon that trump agreed. >> to the delay. that came after trudeau. >> committed to carrying. >> out a. >> $1.3 billion. >> border security plan and. >> to. appoint a. fentanyl czar. >> but guys, really two. questions right now. one is. >> what. >> trump really got out. >> of this. many of these commitments appeared to already be in the works well before these. >> executive orders on the tariffs existed. >> and the other is. >> whether trump will want to see. >> any additional. >> action in. >> order to postpone the. tariffs further. >> what that will look like and whether we. might all be back here. >> on the brink of a trade war. >> again a month from now, guys. >> megan, there's a. tick tock in the journal. >> that tries. >> to go through things. >> and i. >> guess one of the. questions

that investors may have is, did the aides around president trump, were they. >> able to. >> bring him down. from where he wanted to be? what are. their people around the president now? that was part of the characteristics of the first term. >> that were. >> people saying, well, mr. president, maybe you. want to do a little bit less than that. >> i think we're still learning about that. what i can say is. >> there there's a lot. >> of speculation. and some thinking that scott. >> bessent really. >> played a role over the. >> weekend in trying to temper trump. remember on friday. >> the white house was telling. >> us that the tariffs would. >> take effect on saturday? >> they would. start getting. >> collected on saturday. >> then obviously we didn't see any. >> language until saturday evening, and once we got that, it said they. >> were. >> meant to take effect tuesday night. >> so even. >> that little bit of a delay there, it does appear that. somebody had some influence on him and. agreed to or made. >> him agree. >> to postpone. >> things just a little bit. but

what i will also say is. >> that trump is a really firm believer that nobody gives. >> up something for nothing, and. >> that something has to be on the table, some sort of a punitive. >> tariff or. >> whatever else it. >> might be. >> has to be on the table. >> in order for anyone to agree to anything. >> and by going through this news. >> cycle. >> even if some of. >> these accomplishments. >> or agreements. >> might be a little bit. >> recycled, trump can now. >> tout them and say. >> look what i did. >> whether he. >> wanted to. impose the tariffs anyway or not. look. >> i think part. >> of it is just. >> from watching his. first administration. >> seeing what he goes through, this is. >> his way of. >> doing business. >> this is how he goes about things. >> it's how he will get. >> to other negotiating positions. he wants to set the. >> stage very. >> early. >> and he's also made a big deal about saying promises made, promises kept. >> he promised. >> on the campaign trail that he was going to raise. >> tariffs. >> and this. >> was a. >> huge part of it. >> and probably. >> looking like he wants to deliver. within weeks of being in office as part of it. >> to becky yesterday. >> absolutely. a lot of this.

>> is really reminiscent of that first term. go ahead steve. >> you know, i was. >> going to say. >> yesterday becky and i had a conversation about this idea of whether or not he meant. >> to. >> make to be permanent tariffs. and you were kind of in the temporary camp and you ended up being right. i still not sure. >> i don't. >> know where it will be in. >> 30 days. but when we spoke. >> with kevin hassett yesterday, that. >> changed my. >> entire position on what was happening. >> but after our conversation, somebody was listening. >> a key. >> executive who was hanging around. >> the white house. >> and this executive went to the white house. officials with that question, are these permanent and temporary? and the white house folks couldn't really answer yes. >> is the answer. >> yes is the answer. >> so i don't know, i guess, megan, if you're. >> still. >> there, that's really the question that that people have. are we is a 30 day reprieve, are we right? i feel like i was on a. >> roller coaster. >> ride here. and imagine if. >> you were. >> the parts supplier. >> of a guy with. >> a business in canada. >> well, i think that's the question. >> look, to. >> me. >> it's getting my. mental

abilities. >> back to where. >> we were four years ago and remembering how. >> this president operates. >> and trying to flow with the news flow like. >> that, i my question. >> would be, how does that impact. >> corporate america? >> what decisions do. >> they make? >> we're going to talk. to a. >> whiskey company a little. later this. morning and go through michter's. >> to see what decisions were made. because you. >> heard anecdotally about. >> orders being. >> canceled from canada, orders being canceled from mexico. >> and vice versa. how does that play out? >> the other thing. >> i will say. >> is lori ann larocco has been. >> doing some reporting on this. just saying. that shipping companies. are and any of the companies. >> that are talking about doing. orders right. >> now from china, everybody's putting in these new clauses that basically say if there are tariffs that. >> are put into play. >> all of this is renegotiable. >> the. >> prices on these things. >> it just seems. >> like. >> a difficult way to run a railroad. but i was thinking something that we need joe back to, to, to interpret trump. i do powell every eyebrow he moves i understand. >> yeah but.

>> trump we need joe is going to be back soon. >> yes he's going to be back very soon. >> we need. >> joe back. that is part of the game is figuring. >> out the interpretation. >> and that's why it's so valuable to have these guests. >> on from the white house, because. they're coming in, they're messaging and they're sending a. >> message and you're interpreting it. >> yeah, you. >> got to figure it out. >> megan, thank you very much. >> all right. coming up, we're going to talk about the market reaction to the latest tariff moves. the futures right now looking at very modest declines in the s&p 500 after it fell three quarters of a percent yesterday, though the nasdaq does have a little bit of a bid in the green. and in the 8:00 hour, cathie wood will join us to share our big ideas of 2025. squawk box will be right back. >> for the. >> fourth consecutive year. >> interactive brokers is. >> one of. >> the fastest growing prime. brokers and is now number five in preqin's ranking of top prime. >> brokers. >> interactive brokers serves both organizations and

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find out how to pre-order and get the new samsung galaxy s25+ on us with a qualifying trade in. call, click or visit an xfinity store today. who gives you the best price, go to finance buzz.com. >> for. >> index futures this morning, implying very modest pullbacks toward the open. after yesterday's declines of about three quarters of a percent in the s&p. joining us now paul hickey of bespoke investment group co-founder paul good to see you. >> good to be here. >> plenty to chase around when it comes to trying to figure out what's preoccupying this market. what's driving it yesterday. very fascinating. it's trading like it's a binary kind of

equation here. either we get immediate stiff tariffs or we don't. and the market wants to fade if we don't. so how does that leave an investor at this point. >> you know. >> i think what you have to do is you have to. >> reset your. >> expectations as an. >> investor. >> you know, and re-acclimate. >> to the situation we had four years ago where there's never a dull moment. okay. so we have constant headlines. in the last two weeks. we had constant headlines four years ago. what's interesting to remember, though, is the first year of trump's first term in office was one of the most placid environments for the market in history. we had every month of 2017 was up, except for march. we were down about 30 bips the vix was the narrowest intra year range on record, and i think the maximum pullback was like 2.5% from peak to trough. so as an investor, i think when you see these headlines and these tape bombs, you just have to take a step back and not try and react to every single news event. because right now, this morning we're basically on the s&p where we were friday night. >> paul why are you wearing a. corona tie.

>> so it's my it's my trade war celebration. you know as we were talking as senator schumer was talking about corona being more expensive in his press conference. now i don't have any avocados with me, but. >> so in a month that could be 25% more expensive. >> yeah. so, you know, i had to get it early, you know, avoid the tariffs. >> i guess the question when talking about how this might or might not compare to 2017 or whether it's relevant is the initial conditions, right? i mean, 2016, the market had a series of freak outs. we had an industrial recession in the early part of the year, brexit, obviously a very nervous walk up to the election. valuations were in check. you know the fed was you had rates near zero. so the point is what matters now over and above what's happening with the administration and trade. >> no, that's exactly right. you have to consider where we are right now. so you know, the market we had last year, we had a very strong year. we had 57 record highs. we had the s&p never closed below its 200 day moving average. so in those kinds of environments you're

setting yourself up where there's not a lot of margin for error. hence you saw the market sell off quickly on a hair trigger fashion last monday with deep seek. and you saw this monday with the tariff news. so you have to take that stuff into account where certain events which may have been reacted to in one way a year ago are going to be reacted to differently now. so i think in that respect, gains are going to be harder to come by. you're going to see more volatility in the market. but overall underneath and you look at the reaction what we saw last monday and what we saw this monday is the dip. buyers were quick to get in and we had a very strong reversal. >> what's the takeaway paul. >> is are tariff. dips buying. opportunities from now on. >> so i think to the extent where what the actual tariff news is, if it's just if it's just a talk, let's say we're going to do this, that's one thing. if it's if it's actual implementation of the policy, there's going to be a short term period of volatility in that. and so you have to, you know, adjust to what happens. but in the long run i think the markets

will adjust to it. we have the economy, which. for the record 2018. >> was a flat year. >> it was a flat year. >> now maybe it was because. >> 2017 was. >> a good year. 2017 was all about the anticipation of the tax cuts of the tax cut. but then. >> it was. >> because of tariffs. >> it was a monster year. so and we had a strong we had a strong gain. so i think in that respect, you know as we came into this year, we're not looking for the type of gains we saw in the last two years. and it could be treading water. but in that environment, i think it's a market where we're just treading water for the year is better than some of the alternatives that you have in, say, fixed income or other assets. >> the implication of. >> what you're saying is trump's bluffing on. tariffs by the dip. well, that's. >> the story. or if not bluffing, i mean, i think it does make sense to actually also take account of the fact that we do not have an s&p 500. that is about the net trade balance in goods. i mean, that's not really the big swing factor in terms of whether our economy performs or

whether corporate earnings do well. >> no, but it is. >> a small beliefs just in terms of. >> getting jobs back here. >> and of course, but my point is like the market is not so acutely tethered to what is going to be the terms. >> i think that's one factor. but the bigger picture is you have the economy, which is doing good. you have you have earnings season, which is coming in very strong, and you're not here really hearing a terrible you're not hearing companies lowering guidance, saying, oh, because of these tariff environments things are going to be bad. >> well, diageo did, just to be clear on that. >> they're importing. >> consumer discretionary. >> 45% of diageo. >> yes. but okay, so the tariffs coming into this election we tariffs were always a con of the trump getting elected. the pros are increased government efficiency. and what we're seeing is overshadowed over the weekend is you know you remember the 80s when defense companies were spending $600 on a bolt or, you know, $1,000 on a toilet seat. they're starting to expose some, you know, excess spending. and if we can get a more efficient government spending, i think that's a pro that we have

to think of it. and these companies that are generating the bulk of their revenues from federal spending have been decimated since the election. they were outperformed over the last four years. we call them the doji dogs. and they've since election day. they have given up all their outperformance over the last four years. >> well, do you remember the last thing. >> that hassett said to us, becky, yesterday was. >> we're going to do the president's budget and we expect when we put all of the policies in. >> we expect. >> there. >> to be substantial growth. >> and the question is how you. >> measure that growth. >> because we've also. >> had republican. >> congressmen last. >> week on friday. >> who told us. >> that. >> look, they weren't going. >> to be looking at the cbo. >> scoring anymore. >> because they didn't think it took. dynamic growth. >> into account. >> enough with those things, too. >> so it's a look, the. >> one thing this does. >> is. >> make people. >> who are used. >> to things being done the. >> existing and. >> the. >> existing framework very uncomfortable because there's a lot of change. >> things have been. >> shaped change. >> and it's. >> going to be hard to try and figure out.

>> how to meld. >> and put it all together. >> and the uncertainty. i think, steve, you talked about this yesterday, the uncertainty index about companies is that that that is certainly you know, that's one of these concerns with the tariffs. that's a concern. so you have to balance the good with the bad. and i think less regulation and lower taxes are going to help to offset some of the uncertainty and the potential of tariffs. >> we're in a. >> place, mike. is trump a buyer or a seller or. hold you know it's funny i just never or maybe i never think of the market as actually being that hinged to the president. but yesterday, at any given moment it was pretty hinge. sure, sure. but again, i keep saying we've been kind of chopping around this, this area for three months, and i think you could look at the way the markets perform, paul, and say, we got a big gut check on the i theme a week later. you know, you have kind of an aggressive tariff gesture and the market just keeps kind of hanging in there and shopping around. >> we always say to clients when they ask about the president's going to do this, no matter what party the president is from, take a step back, ignore it.

there's market and the economy is much bigger than who is in dc. they can cause short term issues, but obama and trump are okay in the three best performing sectors under president obama were the three best performing sectors under president trump. they are two completely different presidents. so in that respect, look at the bigger picture and not just focus on what's going on in dc. >> so the. question is. >> is trump a buy a seller or forget about it? >> that's really right. yeah, i think you want to buy it. >> good reminder. thanks, paul. good to. >> see you. good to see you. >> all right pepsi just out with quarterly results. earnings of $1.96 a share beat estimates. >> by $0.02. revenue came in at 27.78 billion. >> that was slightly below expectations. pepsi realized organic revenue. >> growth of. >> 2.1% during. >> the quarter, versus estimates of 2% growth for the full year. >> pepsi says that it sees. >> core earnings. per share. >> growth in the mid-single digits. >> the street was expecting growth. >> of up 4.6%. >> you can see that stock right

now off by. >> about 1.5%. >> and then. >> there are shares of. >> spotify, which are rising. >> after earnings and revenue beat expectations. >> the company also. >> offering some upbeat guidance results were driven by strong user growth, price hikes and cost cutting. and i think. >> they've. >> just completed their. first profitable year. that stock right now up. >> by about 8%. >> when we come back, palantir shares are soaring. >> we will show. >> you what. >> the company reported right after this. >> check that out. >> up 20%. >> this morning. also later quarterly. >> results from merck and pfizer are expected just in the next few minutes. we'll bring you those numbers and the reaction on wall street. squawk box will. >> be right back. >> it's not if the markets will turn, it's when at howard capital management, our proprietary family of funds, actively navigates complex market landscapes while seeking to safeguard your tomorrow. we

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restrictions apply. >> shares of palantir are sharply higher. earnings for the company of $0.14 a share beat the street's expectation of $0.11. revenue came in at $828 million. the street was looking for. $776 million. current quarter guidance also came in well above expectations, and the full year sales guidance was also higher than expected. in the earnings release, the ceo. >> alex karp, said. >> that the results demonstrate. >> the company's. deepening position. >> at the. center of ai of the ai revolution. i think they talked about organic growth. basically. >> that. >> couldn't be stopped. that stock is up by. >> about 20% right now. >> it's been one of the wildest, hugest outperformers of the last year. it's doubled. >> since last year. >> was it the largest gainer. >> last year? the best in the s&p 500 now went into the s&p during last year. but yes, of those stocks that finished in the s&p and just a real fevered following by retail investors.

>> right. but now look at it one. year up 488% i think yesterday we were talking about. >> up. >> 360 something. >> so massive massive gains. also we've got dow component merck. just reporting earnings. >> listen up everybody. >> earnings came in at. $1.72 a share. that did beat the street's estimates of $1.62. revenue came in at. $15.6 billion. that beat estimates of. $15.5 billion. but revenue guidance for the full year. >> did come. >> in below. >> expectations, and. >> the range for full year earnings guidance was mostly below. consensus as well. >> merck also said that. >> it. >> is. >> temporarily pausing all shipments of its hpv vaccine, gardasil. >> into china. beginning this. >> month and through at least. >> the middle of the year. >> the company flagged. >> last summer that. >> those. >> shipments were way down. that came as a shock to the street at the time. just a few weeks ago, at the j.p. morgan conference, the ceo rob davis, said that they were seeing the situation stabilized. you can see right now. shares of merck are off by

about 3.4% this morning. let's take. >> that back. 2.8% okay. >> it's bouncing around. you're going to see some early movement as people try and get their arms around these numbers and figure out what they think. >> about the guidance. >> we have a. >> guest coming. >> up to discuss. >> this, i believe. >> yes. okay. a little the next hour. >> coming up, how retailers are preparing for tariff uncertainty. courtney reagan has a special report next. and as we head to break a look at yesterday's s&p 500 winners and losers. >> executive edge is sponsored by at&t business. next level by at&t business. next level moments need the next it all started with a small business idea. it's a pillow with a speaker in it! that's right craig.

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>> visit send info kit. com for all the details. >> physicians mutual. >> physicians mutual. >> good morning everybody. welcome back to squawk box. we're live from the nasdaq market site in times square. the futures this morning. >> are a little bit. >> of a mixed picture. the nasdaq.

>> actually picked. >> up before. we were looking at all of the major averages. the futures in the red. the nasdaq right now looks like it's up by about 11 points. dow futures are down by close to 100. the s&p futures down by about five. >> tariffs against our north american trading partners are on hold. while china announced its retaliatory measures. >> against tariffs. >> that went into effect at midnight. joining us. now with the potential impact on the. >> retail sector. >> courtney reagan. >> we got to do our homework anyways. >> right, steve. >> because they're going to it sounds like they're going to come at least as of right now. so sourcing as you know, has held really close. >> to the vest for a lot. >> of retailers. >> but the details in this case. >> really do. >> matter when you're trying to evaluate tariff risk. so the good news is at this point, most. >> analysts surmise the risk is manageable if there's no universal tariff. >> so retailers. >> have begun to diversify away from china. before the first trump administration's tariffs. the bad news is some. >> of it was nearshoring. to mexico. >> the share of. >> shoes imported from. >> china has fallen from. >> more. >> than 55% in 2017 to about 42% in 2021. >> at the same time, for imported from mexico has. >> risen to 2.1%. from 1.6% so

still small. >> but according. >> to. >> the. u.s. international trade. >> commission. >> now, in 2013, almost 38% of. apparel sold in the us was. >> imported from china. >> in 2023. >> it was just. >> a little more. >> than. >> 21%. shifting to mostly other. asian countries, so not. >> mexico in that. >> case. >> however, more than 20% of. >> denim is sourced from. >> mexico, according to the american. >> apparel and footwear association. but levi strauss cfo says it sources just 5% from mexico, less than 1% from china. >> calling both immaterial. >> abercrombie calls mexico. >> sourcing immaterial. >> as well. >> though kontoor. >> brands, the maker. >> of lee, wrangler. >> and other denim brands, does have 38 factories in mexico. no, tariffs on. >> canadian imports and additional. tariffs on chinese made goods. >> is trouble for. >> best buy. those two countries. >> top two countries. >> of import. >> and boot barn 230% of its goods are made in china. >> 25% from mexico. around half. >> of steve. >> madden sales. >> are products. >> imported from china or mexico. >> now. >> home depot says only that it will source. >> the. >> majority of.

>> its goods. from north america. >> so some. >> portion of that is likely lumber. >> from canada and. >> a. >> big starting point for home improvement projects. so the retailer. >> has always noted that lumber price volatility can dramatically influence influence spending trends. so that's. >> one. >> that we. >> are. >> a little worried about there. >> but we don't have a lot. >> of further detail on the breakout. >> are they. >> taking actions courtney to. >> so almost all of. >> them are sort of saying almost. all of them are. >> saying. >> you know, we're going to wait. >> and see. >> but what we know. >> is that if. >> and when the price increases come down for consumers as. >> a. result of these tariffs, again, we know the timeline. >> is sort of moving. >> but let's. >> let's work on the information that. >> we know now. it won't probably happen until early summer because most of the other products have. >> already they're already here. they've already. >> sort of been accounted for. so interesting is with the orders, i think, for back to. school orders, everything's now being negotiated. >> with these. >> clauses that say if tariffs are. >> put into. >> play, we're going to renegotiate the prices. and, you know, it's that sort of clause

that is going to just be commonplace now. absolutely, absolutely. >> i mean. >> it almost seems silly not to put something like that in there. why didn't we do this before. right. >> exactly. >> exactly, exactly. >> and so i think just like everything force majeure. right. >> and the bigger you are, the more potential you can absorb it, the more multi category you are. >> so retailer. >> like walmart. >> yeah they're probably going to have to pay more for avocados from. >> mexico and strawberries. >> from mexico. and we know grocery is a big part. >> of. their business. but maybe they can use the. >> levers of the other. >> categories that aren't. >> subject. >> to tariffs. >> to sort of. >> even out that margin. >> can i read something, courtney? >> i'm looking for. >> this right now about a major, an. overseas retail manufacturer that's moving stuff back to the. >> united states. >> i mean, there are. >> many of them that. >> are that are. trying to, at. >> least i would. >> say near shore united states. >> you'll have to. >> you'll have to come up with a name for me on that one, because. >> it is. >> tricky. >> because we. >> don't have. >> the skill. >> $3 billion. >> company steve madden announced. >> from the white house. >> so that's. >> plans following president

trump's election victory. >> to rapidly have his chinese production due. >> to the prospects of tariffs. >> yes. >> so they're they're having their. >> they're having. >> their production but not necessarily moving to the united states. >> yes, exactly. >> thank you courtney. >> all right. when we come back, uncertainty around tariffs complicating an already tough cycle for spirits producers. we've got the ceo. >> of michter's. >> distillery who will join us next on how they might be able to weather both u.s. tariffs and retaliatory measures in an environment where consumers were already buying less spirits. also a reminder for you you can get the best of squawk box in our daily podcast. just follow squawk pod on your favorite podcast app and you can listen anytime. squawk box will be right back. >> my clients deserve someone. >> who. >> understands their world, someone. >> who listens. >> who has their best financial interests at the center of every decision. our business is built. >> around being responsive. >> to our. >> client's ever. >> changing needs as an advisor, as. there are. >> a custody services. >> provider. >> i see my client's. >> success as my own. >> because when they. >> grow. >> we grow. >> with them. >> for over. >> 25 years, >> we've been committed.

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further complexity to its ability to provide updated guidance. shares of diageo down overnight, tumbling to their lowest level since march of 2020 before paring those losses. you can see that stock right now indicated off by about 1.7%. joining us right now to talk about the potential impact of tariffs on the spirits business is joe magliocco. he is the president of michter's distillery and its parent company chattem imports. and joe, it's great to have you here in studio. >> thanks so much for having me on. >> we've been talking to you for years about this since the last trump administration, when there were tariffs that were put in place that impacted your business. what i'd like to know is how you kind of navigate this as a business leader, as somebody who is steering through all of this, what's the uncertainty mean? what are you doing? what are you seeing? >> yeah, i mean, obviously. >> there's a great deal of uncertainty at this point. >> and things just. >> keep changing. you know, i woke up this. >> morning and. >> i saw the china tariffs. you know, 10.

>> to. >> 15%. on certain american goods, you know, restricting key mineral. sales to the us. antitrust probe of google. >> et cetera. >> et cetera. et cetera. so it just it just it seems to change really, really quickly. there's just so much. news over the weekend. you know, it really affects us with, you know, mexico where we're, you know, our number two item, los siete mezcal comes from mexico. we import it. it's an important item for us. you know, michter's our sales and michter's in china. china is very receptive to american spirits, especially american whiskey. and our sales. i was i was surprised there were 58% in china. last year in 2024. >> wow. >> you know, so even though the market's small for american whiskey, it has tremendous promise. and the chinese accept things very, very well from us, you know. and, you know, canada is our biggest export market. >> so there's a lot. >> of there's a lot to do. >> there's a lot of hand holding. >> you know, i spoke. >> to our. >> canadian importer yesterday

and who great fantastic company, fantastic people. been great partners. you know, there's a lot of i was i was on a zoom with an american distributor yesterday. they were just saying how they're so happy that they've stocked up on canadian whiskey. they're so happy that they've stocked up on on tequila. you know, and now i think especially with the 30 day suspension of the american tariffs on, on mexican products and on canadian products, i think you're going to see a lot more stocking up. >> are you doing that? >> are you. >> bringing in. >> as much as you possibly can? >> absolutely. >> we yesterday we we've already you know. we've already been concerned about it and taken a bigger position than we normally would. and it's interesting because, you know, this comes at a time when, you know, distillers and importers and retailers have been trying to destock because, you know, interest rates are so high relative to how they have been. >> so it costs you more to. >> hold on to all that inventory. absolutely. but but, you know, given you know, these

substantial, you know, tariffs, it really makes your. >> whiskey taken down off the shelves in canada yesterday. >> well it was announced that it was going to be taken off the shelves today. ontario, quebec newfoundland and labrador, nova scotia. and it's interesting british columbia took a different tact. they said that they were going to stop buying spirits. american spirits from red states. oh, wow. so that's a little bit of a different tact that this. >> is stuff. >> this is. >> stuff i've never. >> seen before. >> i'm sorry. >> you're in. >> kentucky, aren't you? >> yes. >> so that impacts you? >> yeah. >> yes. >> yeah, absolutely. >> yeah. so let's. >> but but but but but one bit of good news is that, is that, you know, again things keep changing, steve. so fast. yeah. you know, late last night i saw that manitoba last night announced that it was because of the 30 day suspension of the american tariffs that they were going to suspend their removal of american spirits for 30 days. >> does it matter.

>> though, because we saw canadians booing at nhl games for the star spangled banner. are canadians going ahead and continuing to buy if they're on the shelves or not? >> it is a wonderful question, and that's something that, you know, again, when i was speaking to some canadian friends yesterday, i was talking about, you know, canada has been a terrific partner. the provinces in canada pretty much run the alcohol business. you know, whether it's british columbia, ontario, they have absolutely beautiful world class stores. you know, ontario, for example, has been a great partner for american spirit companies. they stock over 3600 american alcoholic beverages in ontario. they buy them from over 35 us states. and they say that they have imported last year, $965 million canadian of american spirits. so, you know, big

question mark is, you know, is, you know, the american companies try so hard with their foreign partners to cultivate, you know, and establish, cultivate countries and establish american spirits there. you know, question, you know, what happens to the goodwill, right? >> so does it change whether these tariffs go into place or not? >> i think i think that i think short term, i think it absolutely does. but again, you know and again look, look i'm looking at it from the narrow perspective of somebody who's trying to sell some booze and import and export and stuff like that. you know, you know, we do run huge deficits. you know, our deficit with canada is over $50 billion. >> no it's not it's 40 billion. and it's all because of oil. >> it's not a. >> huge deficit. it's 4% of gdp, 4% of the total. >> trade number. i looked at the us census bureau for 11 months of but whatever. but but but we

you know, there are reasons why the government does stuff. i mean, i can understand concern about border security and the government's had to think about a lot of different things. but from the narrow perspective of trying to like, you know, import and export spirits, you know, it's a real challenge. >> so have you talked to any lawmakers here in the united states about any of this? the trump. >> white house? no, i have not. i think that that is, you know, really it really is a government issue. but your industry certainly has representatives talking about. oh, absolutely. yeah. i'm absolutely. >> so walk us through your weekend. we all worked really hard, but we didn't have employees and product on the line. who did you call? did you what were kind of emergency situations that you were preparing for? >> preparing for goods being pulled off the shelf in canada? what you know, what do you do now? now, now that's a new situation. having faced before, i faced. >> you on the phone with mexico ordering product this weekend.

>> yesterday we were yesterday. yeah, i was on i was on the phone with our own people, planning what we were going to do with mexico over the weekend. but then yesterday we ordered more mezcal. but you know, you really have to stock up. and, you know, keep your fingers crossed and hope for the best. >> your business. how much of it is canada? mexico? china? >> it's significant. as i said, you know, our number two spirit item alcs. the mysterious mezcal is from mexico that we import. and the us is a big market for that. you know, we were up 58% in china. canada. canada is probably over 20% of our export business. you know, and our export business, you know, we export to over to 80 countries plus. and it's significant for us. and i think i think there's a lot of, you know, i think i think hopefully this stuff gets worked out because i think there's tremendous upside internationally for american whiskey, because the market

share compared to scotch and the market share compared to cognac abroad is quite small. >> joe magliocco from michter's distillery, we really appreciate you coming in and walking us through all of this, joe. >> thank you so much for having us. really appreciate it. thank you. thanks. i'm just to be. i'm sorry. >> wait, wait, wait. we're still on. >> coming up, the governor of delaware speaks out about companies leaving his state that is straight ahead. and later, senator peter welch joins us to talk about elon musk's influence as he slashes his way through the u.s. government. squawk box will be right back. >> you. >> icy hot pro massaging balm, easy to grip and massage in the power of two max strength pain relievers. ice works fast. heat makes it last. icy hot pro massaging balm. >> home where routine. >> meets. >> remarkable with unexpected moments of inspiration around

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goods coming into the us went into effect. beijing targeting everything from us technology companies and crude oil imports to rare earth metals. salesforce is reportedly cutting 1000 jobs, even as the company is also hiring salespeople to sell new ai products, bloomberg says it's unclear which divisions will be affected, but those workers will be able to apply for other jobs. salesforce has declined comment, and shares of palantir sharply higher after its latest full year sales outlook blew past analyst expectations, thanks to what the ceo alex karp, describes as, in his words, untamed organic growth and demand for its artificial intelligence software. that stock hitting an all time high. and with this latest move, it's up. wow. keeps growing. the one year up now 500 and almost 500% 492%. the gains there better than 20% just this morning. >> meta is reportedly weighing a

move of its incorporation out of the state of delaware. last month, online storage firm dropbox obtained shareholder approval to move its incorporation from delaware to nevada, and last year, elon musk moved to reincorporate his companies in texas and nevada after. >> a. >> battle over his. >> pay package. >> in delaware. >> joining us now, delaware governor matt meyer. matt, governor, thank you for joining us. it's great to be here. good morning. >> so what do you say about. >> these companies potentially. >> leaving the. >> stalwart delaware as the place to keep your corporation? well. >> the truth. >> is, in business, companies are always potentially leaving. >> they're always. >> potentially coming. it's just a matter of what leaders are going to go out and win the business. >> for over 100. >> years, delaware has been. the incorporation venue of choice. >> for all the leading. >> companies in the world. today, as i speak to you, nearly. 2.2 million entities are registered in delaware. over two thirds of the fortune 500 companies, 81%. >> of us. >> ipos last year were

incorporated in delaware. >> we're leading. >> the way. >> we understand. >> their threats. >> to delaware supremacy. >> that's happened a lot. >> in the last 100 years. and what i'm saying. >> is we're going to be out front making. sure we win this business. if companies have already left. >> we're. >> going. >> to work. >> to win them back. is elon musk and others? are they right that the delaware courts have become, i guess. too liberal in taking care of minority shareholders? yeah. >> i don't. >> think it's a question. >> of. >> liberal or conservative. i think there's a question. >> of. balancing stockholder and management rights. it's been an. >> issue for as long. >> as there's been companies registered, not just. in in. the us, but. >> across the. >> world, to make sure we balance those rights. i understand that some feel. that for. the for in recent years, a number of court. decisions haven't gotten that balance right. >> so i'm saying we need to take a leadership role. >> we are the. >> the business. >> court of. choice for. companies across. >> the world. >> and we're going to roll up our sleeves, listen to what customers listen to, what company leaders listen to, what

the leading law firms are saying, and make the changes we need to make. >> governor. >> you're a business attorney yourself. what do you think the problems are? what what needs to change? >> well, as a business attorney, you know, you first survey the landscape. what's unusual is not only am i a business attorney, the. >> lieutenant governor. >> is a business attorney. >> we've been in. >> office now. it's our 14th day. the secretary of state. >> who's been in office less. >> than a week. she's a business attorney. >> it's the first time we've been able to say that in delaware's history. i'm not. sure if. >> there's another state in the. country that can say that. so in terms of personnel. >> anybody running. >> a company out there knows that personnel and. leadership is among. >> the most important thing. >> we have the. the leadership skills to get this done and to make sure that delaware remains. >> the preeminent jurisdiction. >> what what what. >> do you hear? because, you know, delaware has been. the premier choice for a very long time. as long as i can remember. in any of these issues, you never heard people picking up and leaving like this in mass

before. so what do you think needs to be done? well, first of. >> all, to get. >> them back? >> thank you. i understand for those on social media and watching tv. every day, it might seem like everybody's leaving. the data suggests otherwise. or as i said, we have more entities registered in delaware today than. >> than ever. having said that, there are issues. >> we're just starting our survey of. >> the corporate landscape. what we're hearing, one. >> thing we're hearing, just to. be completely frank. >> i was a. >> sixth and seventh grade teacher. in addition to being a. >> corporate lawyer. >> and i. >> had a student who. >> every thursday. >> he refused to go. >> to recess. and the. reason he refused to go to recess was the teacher who was the proctor, the recess proctor, he felt like. >> didn't treat. >> him fairly. and anytime he'd go out on recess, he'd get in trouble when she was there. >> and i'm hearing. >> something similar from a number of delaware companies and attorneys that they feel like they get the same judge. >> every time.

>> when they come to delaware business court, and they don't feel like they're getting. >> a fair shake. so who. >> are the judges? are there judges who are now on the target list of being the bad proctors on the playground? >> no. >> i don't, i don't. i don't. >> it's not. >> limited to just one judge. i think it's more about how. >> the. judge is selected. >> if you feel like. >> every day you're getting the same recess proctor, no matter what, and there are a number. >> of people. >> who can, who can, who can preside over the case, we need to look at that and just make sure. not only is it actually fair. >> but there's. >> an appearance of fairness to any litigant that comes. before our court. >> quite frankly, it's true in our. >> business courts. >> and in. >> our criminal courts. >> and our. family courts as well. >> mike. >> i want. >> to bring you. >> into the conversation because i think. >> you know. >> a thing. >> or two. >> about this. governor. >> hold on one second. i just want to bring. our my colleague mike santoli on this. >> i thought the problem. was the rights. >> of minority. >> shareholders, that. >> there was. >> no problem with majority shareholders essentially running. >> roughshod over the rights. >> of minority shareholders. >> is that right? i mean. >> are we. >> making a huge deal here over

the fact that a judge declined elon. >> musk's $55.8. >> billion salary? >> i mean, arguably, some companies are making a lot of that, but it probably has become somewhat easier with a lot of these proxy voting mechanisms. and, you know, these it's become common, more activist shareholders to just get this tiny little foothold position for the purpose of making a big push all the time. of course they do. it's not as if they have their way. yeah. >> governor, i. >> don't know. i understand. >> that maybe. >> you need to make some changes, but i'm just not clear. i understand dropbox. >> is a big deal. and elon musk is a big deal, but i just don't know. >> you don't. >> want to give up the right. of minority shareholders. >> to have a. >> say in the company. various studies have shown over the years that by incorporating your company in delaware, it creates additional value for. >> all shareholders. >> and so there's a lot that. >> contributes to that. >> i know that. >> there's a temptation to focus. >> on one. >> case. >> whether it's. >> musk or whatever.

>> the rationale is for dropbox or others leaving. >> we're working. we're looking across the sector, as i said, nearly 2.2 million entities understanding what is what. >> is driving. >> at least. >> the some. >> sentiment out. >> there that delaware is no longer. the venue of jurisdiction. >> and making sure we address that. so. you know, it's easy to focus on a single case. it's easy to focus on three or 4 or 10 companies posting. >> on social media or sending out press releases. we're doing. >> a much. broader sweep than that. >> can i just ask how many judges. >> are there. in the in the court? >> in a business court. >> there are seven. >> so if you are worried about i mean, that's not very many proctors on the on the recess. if you have some that are seen as not friendly to business, these are how long are these appointments last? >> they're 12 year. >> appointments. >> but it wasn't. >> like you had. >> a sudden changeover. >> in judges. >> is there. no. that's accurate. >> so it's the same judges just

making. different decisions that appear to have rankled some some executives. i mean, obviously some companies have made big decisions about about governor. >> governor, what i'll. >> say. >> is. >> even if you think this is a perceived problem and not a problem in reality, once you see any sort of a competition, businesses will use that to try and say, what can. >> you. >> do for. >> me to keep me here? >> you know, it starts the it starts the negotiation, it starts the game that plays out one way or the other. >> absolutely. >> we also. >> think that if attorneys and c-suite execs actually look at the facts. >> and the law. and our process. >> here. >> they're going to choose. >> to stay here. and not not go to vegas and roll the dice. governor, thanks for joining us. >> let's monitor this issue and hope you can come back again soon. >> great. absolutely. thanks a lot. have a great day. >> governor meyer. >> mike. all right. >> markets continue to seek clarity. >> around. >> president trump's tariffs against canada, mexico and china. with us now is joe amato, president and chief investment officer at neuberger berman,

which has $508 billion in assets under management. joe, good to see you. >> good to be here. thanks, mike. >> thanks for coming in. so let's talk about first, i guess, what your fundamental premise was for the economy and markets coming into this year and how, if at all, does the whole trade policy flux influence all that? >> well, we came into the year thinking. >> that growth in 2025 was going to be better. than consensus. and some of the regulatory issues that came out of this new. >> administration or were expected to come out. >> in the animal spirits that were that were being created was going to help growth. >> so our team. >> thinks we were going to be three. >> two. >> three percentage points. >> tenths of a. percentage points higher than. >> what the consensus was. >> now. >> we did say we thought the first couple. of quarters of. >> the year were going to be. >> tricky because there was a new administration. you certainly had the tariffs issue hanging out, which. >> came to. >> light of. >> course, over the weekend. so, you know, i think you've. >> seen some volatility in the bond market late. >> last year.

>> the bond market sort of calmed down this year. >> so i think the administration. >> is still getting its footing. but certainly the speed and scope of some of the things that they've initiated, you know, tariffs being the latest example of it is it was a bit surprising. >> and so surprising, i guess, you know, maybe some people have a strong view as to whether certain percentage of tariffs on some countries is disinflationary for this period of time, or it's this much of an impediment to growth. i think what you can say for sure is i've been talking about it being it's kind of sand in the gears of trade and it's dust in the eyes of business leaders. right. it's kind of like an excuse to do less in terms of committing capital and business. so how does that play out? are we making too much of it? do we just want to get to some kind of stable equilibrium on okay, i guess this is going to be what the rules are and go from there. >> well, i think. tariffs certainly have important implications. >> you know, if. >> these tariffs were. imposed over the course. >> of a full year, the expectation we. >> would have. >> is that growth. >> would. >> probably be maybe as much as a half a point lower than what our expectation was. >> we thought that inflation.

>> could be as much as a half or. >> three quarters. >> of a point higher than what our expectation was for over the course of the year. so those. are meaningful numbers, right? so it is. >> something. >> that of course, we have to pay attention to. now how much of it's a negotiating point? >> i think. >> the weekend yesterday gave. >> you some sense for that. >> you know, that was our expectation. but you never know right. china comes in overnight and retaliates. >> and you. >> know, you've. >> got another few. >> months that there's going to be a review on china tariffs. so there's probably another bite at the apple when it comes to china. >> joe, take me to 29 days from now. the night before. >> the 30 days expires. >> client calls. >> you up and says joe tariffs. tomorrow or something. >> what do you tell them to do? >> i think, you know. >> and interestingly we spent a lot of time sunday night, you know, talking with our portfolio managers first trying to figure out what our view was. so, you know, i think in light of the economic decline that we would expect if, if tariffs were in place that i referenced, i would say equity markets are going to trade off on that. we saw that

yesterday on the initial reaction. and so the markets worked its way back. >> but you know, i think is if it ultimately. >> leads to lower earnings per share growth right. this year our view on equities was not a lot of multiple expansion probably none. so it was all going to be driven by earnings. now if you had tariffs imposed and you're going to see a 3 to 5% decline in s&p earnings, that's not an unreasonable expectation on how the market would pull back. and there you want to sort of pull back weight and then pick up, you know, the pieces if you will. because still long term we think the growth environment is constructive. >> yeah. so in other words you think that this is still an expansion and a bull market that is underway and intact. and these are just going to be a little tricky. >> couple of quarters. but long term growth is better than we had going into the fourth quarter of last year. >> so a pretty decent starting point joe good to see you. thank you. >> to be here. >> can we give credit to the poetry of mike santoli. sand in the gears. dust in the eyes i think by my saying it on the poetry copyrighted it i hope

that's good stuff. i'll repeat it till you're sick of it. it's good stuff. he's stealing it for lyrics. i'm going to steal it. absolutely. are you kidding me? >> all right, when we come back, we've got some new data from amazon about their prime service. we will speak to the vice president of amazon prime about that. also, china's tariff retaliation. and in the next hour, cathie wood of ark invest will join us to talk about her investments, tariffs and market reaction. squawk box will be right back. we're standing up for our right. >> to be lazy. >> we work hard. we deserve to scroll hard. it's the la-z-boy presidents day sale. find the lazy. >> spot. you've been missing la-z-boy. long live. >> the lazy.

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i need indeed. indeed you do. our advanced matching helps find talented candidates, so you can connect with them fast. visit indeed.com/hire the way i approach work post fatherhood, has really trying to understand the generation that we're building devices for. here in the comcast family, we're building an integrated in-home wifi solution for millions of families like my own. in the average household,

there are dozens of connected devices. connectivity is a big part of my boys' lives. it brings people together in meaningful ways. savings in 2024. amazon says that it delivered 9 billion items the same or the next day around the world. joining us right now for more on these numbers is jamil ghani, who is vice president of amazon prime. and jamil, these are pretty impressive numbers. why don't you dig into what this is and how it compares to where you were a year ago? >> yeah, absolutely. >> thank you for having me this morning. you know. >> we launched prime. >> in 2005. >> with a very simple promise. 1 million. >> items available in two days. you fast. >> forward 20. >> years, and now we're delivering to prime members over 300 million eligible items. of

those, over tens of millions of items are available same or next day, as you said. last year, there was 9 billion items available in that record speed. we think about this in two ways. it saves our members time and money. if you quantify the. savings in delivery fees, that's $95 billion worldwide for. >> the average. >> us prime member, that's $500. of savings. and then. >> you almost can't put. >> a price on the amount of time savings that they're getting as well. so we're really, really proud of the record breaking speeds in 2024. we're only going to get faster. we've invested. >> in 60% more. same day. >> sites covering. 140 metros. >> that's particularly. helpful for our everyday essentials business. >> this is the toilet paper, the detergent, all the things a busy family needs. we deliver over 2 billion items. >> 50% more. >> than the previous year in 2024. and that just opens up more and more occasions where busy families like mine can

access prime. >> and get what they. >> need when they need it. >> i mean, i think about how it works at my house, and there are a litany of delivery options that show up at all hours and all times. sometimes i order something and it'll show up at 4 a.m. before i even leave to come here, which is a little creepy as i'm walking out the door. but you guys have this incredible logistics business that you have put together to make this happen. how much investment has gone into that, and how do you see that changing and developing over the next year? i guess drones are part of that too. >> yeah, absolutely. >> we've been investing for over 30 years. the entire history of the company is. >> about. >> you know, every year iteratively making. >> the supply chain network better. >> the big thing. >> i would draw is over the last couple. >> of years, we've made a major transformation in. >> the layout of our network, moving to a regionalized network that puts selection that households like yours and mine need closer to the customer. >> it doesn't change the. >> operations in the building. so we have the same high.

standards for safety and kind of operational excellence in the building. but what. >> really changes. >> is that your package is traveling fewer miles over the. >> road to get to. >> your house. that means you can, you know, leave the house with that package that the kids need for school that day or you need in the office like you just described. we're also investing and have been investing for decades in machine. learning and other ai that allows us. >> to make sure. >> that we know what customers. >> want. >> when they want. >> it, where. >> they want it, and it allows us to have perfect placement into our buildings again, as close as possible to the customer. last thing you mentioned, drone. that is a growing part of our business. we're just getting started though, and that will be. for the ultra fast, really time sensitive items. a big part of that is our pharmacy business. we're rolling out more and more selection through our pharmacy business that will be available in the same day. when you can go to the doctor and have the prescription you need at your doorstep later that afternoon. again. >> it's a game changer.

>> yeah, i'm still trying to figure out if i, if i if it's worth it, given the drone traffic, it may put up in the panic that it causes in places like new jersey with all those drones. jamil, let me ask you, how many prime members do you now have? >> we have. >> over. >> 200 million prime members. worldwide in 24 countries. >> i want. >> to go back to what becky was talking about yesterday. >> morning. >> before i came. >> in. >> the squawk. >> box to. >> cover crazy tariffs, i ordered coffee. by the time. >> i got home. >> at 3 or 4:00 in. >> the. >> afternoon. >> the coffee. >> was there. how soon. >> after i hit the. button to. pay for it? did you start moving that. >> coffee. >> almost instantaneously? >> virtually instantly. >> i'm going to hit the button and. >> the coffee's going to. >> start moving. >> it's going. >> to start moving. we're going. >> to we're going to pick it from our fc increasingly really, really close to your home. we're going to package it. we're going to slam it. otherwise get it out on the transportation means and

then send it off to your home. you know, we're obviously consolidating and creating route density so that we come to your household and your neighbors household and can do that really efficiently. we may already be coming to your household that day and that that package is on its way. and then you can simply track it in the amazon app and know exactly where it's going to arrive at your home. >> and then i have one question. since you're. >> always up and down my street. >> when are you. >> going to start using. >> electric or alternative. >> fuel vehicles? >> well, in fact, we already are. we have. >> the nation's. >> largest electric. >> vehicle fleet. we have over. >> 20,000 electric vans on the road and orders for more. and we're rolling those out. >> not only in. >> the us but around the world. and we're really proud of the investment we've made to advance that. technology and put it put it to work those those vehicles are optimized for our drivers. not only are they electric, but they have really efficient layouts inside. and our drivers tell us that they love them. >> jamil, let's talk about tariffs and the tariffs that were recently averted by both

canada and mexico and then the ones that have been placed on china. we have been reporting and talking about how amazon could be a beneficiary of part of the tariffs that would be put in place. chinese competitors like tamu and shein have found ways around any of these tariffs in the past because of the de minimis clause. anything that's under $800 gets through and escapes that. president trump closed that loophole in the tariffs that he'd been proposing most recently in that executive order he put out. and that could be something that would really help out amazon from a competitive perspective. but what's your what's your thought on this? what's amazon's position? >> you know, it's a. >> clearly as. >> you've reported it's a really dynamic situation evolving. >> hour by hour day by day. and so we're we're. >> assessing the. >> impact to. >> our business closely. >> our number one priority. >> is minimizing disruption for our customers. the good. >> thing is. >> we have been. >> investing for. decades in. >> a diversified.

>> supply chain. >> working with vendors and sellers around the globe. >> and we're going to continue. >> to do that to make sure that we minimize the disruption to our customers. >> we look forward to working. >> with the. >> administration to do exactly that. we're here. we're here to. >> serve customers. and prime members, and. we no. >> matter where the situation goes, we're going. >> to focus on that. >> was there hoarding ahead of the tariffs or bringing in additional. we talked to a distillery company a little bit ago and the ceo said that yeah, they did in fact bring in as much as they could. yesterday they were placing orders for mezcal to get ahead of any potential tariffs that would come in down the road. what are you all doing specifically? >> we're always assessing. >> the state. of inventory. >> and the placement. >> of that inventory. no different than we do. >> before the holiday peak period or before prime day. and so that's that's an ongoing. >> effort. >> no different than any other day. so we continue to monitor the situation. as it as it continues to develop. and we're going to do what's necessary in order to minimize disruption for

customers. >> jamil ghani, i want to thank. >> you, jamil. >> for joining us today. >> thank you. >> so much. >> appreciate it. >> and i hope you continue to enjoy. >> those. >> speeds in that coffee. >> all right. up next, stocks to watch ahead of the open. plus the world's richest man elon musk upending federal agencies to overhaul government and slash spending. but does he have too much power? senator peter welch joins us to discuss that. squawk box will be right back. >> time now for today's aflac trivia question. what year was facebook launched? the answer facebook launched? the answer when squawk box prime, it's me. i mean, you. wake up, come on man! you gotta tell employers to take another look at all the benefits they're offering. everybody wants to build the best team and offering aflac can help attract and retain that top talent. you know we like that top talent. and listen, i mean you gotta listen. aflac gives employees cash to help with unexpected medical bills.

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profit. >> expectations. >> but revenues. >> came in below estimates as. >> north american demand for the. >> company's snacks. >> and drinks. >> faces some headwinds and consumer pullback. >> pepsico is also still feeling some of the effects of. >> a recall at its. >> quaker division. this last december. >> so watching pepsico shares. >> down about two and a. >> third percent. also two big pharma names reporting results before the bell. those stocks are. >> diverging a bit, as you. >> can see here. >> merck. >> falling roughly. 8.25% despite posting. >> a beat on earnings and revenues. >> but its guidance disappointed investors, with. >> the full year revenue. forecast coming in below some expectations. >> the company. >> also said it's temporarily. pausing shipments. >> of its hpv vaccine. >> to china. >> meanwhile, pfizer shares. >> are. >> up just around. >> 2% or so after the company. >> reaffirmed its earnings and revenue guidance for the full year. >> the company also beat its fourth. >> quarter estimates, with. >> revenues growing. >> 21% on a year over year basis. >> pfizer was helped. >> along by. >> amongst other things, better. >> results from its. >> covid product sales. >> and then let's call your attention to what's happening with paypal. >> shares are. >> sliding more than 6.25% right

now, despite reporting better than expected fourth. quarter results and. >> issuing guidance that topped analyst expectations. >> but total. >> payment volume could be a concern. >> it came in just short of. >> estimates, and paypal's take. rate slipped from a year earlier period. >> the company also announced a $15. >> billion share buyback program. >> saying it expects. >> to make around. $6 billion. >> in repurchases. throughout the course of this year. >> so a balance of news. >> but 6%. >> decline for paypal. becky i'll send things back over to you guys. >> yeah that is a big move to the downside. dom. thank you very much. we'll see you in just a little bit when we come back. one bank bucking the return to office trend. we have that story next. and then elon musk moving with speed to rework the federal government. but does he have too much power? we're going to hear from senator peter welch about that and much more. squawk box that and much more. squawk box will be right back. at morgan stanley, old school hard work meets bold new thinking. to help you see untapped possibilities

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the full story of what's going on here in texas, including. what you need to do to profit. you just need to go to the website that's on your screen now. invest with an advantage with cnbc pro. >> cnbc pro gives you the. >> tools that you need. >> to. >> become a better investor. >> go pro with a flash sale offer for a limited time at cnbc.com. slash pro flash. terms and restrictions apply. >> democrats on capitol hill are questioning the power of elon musk, including his doge team, getting access to the treasury department's payment system. musk also announcing a move to shut down usaid. joining us right now is senator peter welch, who's a democratic senator from vermont. and senator welch, i want to thank

you for being with us today. look, there are some big and pretty active moves that are being that are taking place. the trump administration has moved forward with its plans pretty effectively and actively. what is the response from the democratic side of the aisle? >> well, the democratic. >> side of the aisle to. >> the authority of. >> one person. >> elon musk, to go into the. treasury department with five. >> in effect. >> teenagers. almost 19. >> to. >> 24, giving. >> them keys to the. >> computer is. >> total. >> total rejection. >> and hopefully republican. >> colleagues will. >> have the. same apprehension. i mean. >> first of. >> all, they have no authority. >> no legal authority whatsoever. >> number two. >> they are. >> now have access. to your social security number in mind. what we paid in taxes, all that private information. and they have no authority whatsoever to do this. >> so this is something i think. >> that is a real. threat to privacy. it should be primarily

for congress, a threat. to protecting the safety. and the privacy of americans. and of course, what is the ultimate outcome of this? so there's an enormous consternation on our side. but my hope is there will be a willingness on. >> the part. >> of my. >> republican colleagues. >> to. >> stand up against, essentially a hijacking of the. >> article one. >> separation of powers, checks and balances, responsibility that. congress has. >> i mean, i think it seems from the outside at least, that the democrats are still kind of licking their wounds from from this last election. the results trying to figure out how to put together a response. i will say it's been difficult for us at times to get democrats to come on the program to talk about it. yesterday, we were turned down by several senators to respond to any of these things. so it kind of seems as if you all are looking around trying to figure out what the response will be. is that an accurate representation? >> you know, there's some real.

>> truth in that. >> and here's why. what trump is. doing is lawless. he doesn't have the authority to do this. that limit of law that has always been a something that presidents, republican and democrat, have always respected. you had with trump that unilateral impoundment. of money. that's a fundamental responsibility of congress. it's illegal. it's been struck down by the courts. you have them setting stopping payments to usaid programs. that means that some of these food programs are stopped. it means that medicine that is on a dock is not being delivered to people who need it. most presidents have a certain restraint. trump doesn't, and it's lawless. and what can we do? we can complain about it, but at the end of the day, there has to be respect on the part of the presidency for the rule of law. and trump takes delight in bashing that down. so damage gets done, like on the usaid

programs, people were told not to go to work, and then portals that provide access to payment systems for like a community health center in vermont, those have been closed and they have like 0 to 5 days in order of cash flow. so even if the court then says that the president had no authority to do this, we've got people who are being laid off. so this is an extraordinary aggressive use of the power the executive has, even though in my view, very strongly in judges, it's not legal the way it's being used. i mean, think about. >> it, but. >> if you are. >> a physician, because you don't own, because you don't have control in the senate, you don't have control in the house, you're in a position to just sit back and say, we don't like this. and we wish republican senators would stand up and say something, or the issue will play out in the courts. >> well, the reality is that we do not have control. 53 republicans in the senate, 47 democrats and a three vote margin in the house. so there is

that, quote, trifecta, you know, but what is going to happen and is starting to happen is if there's overreach on the part of the executive, then real people get hurt. like these tariffs that were called off. we had a roundtable in vermont, but that was going to hurt vermont farmers. it was going to hurt vermont maple sugar manufacturers for equipment. it was going to hurt our manufacturers in general. so people are going to start experiencing this. and i think that the danger for any administration. but it's particularly so with the trump administration, is overreach. and then there's a pushback in what people thought they were voting for. they find out, wait, that's not what i really meant. so i do think we have to push back. i mean, those five kids going into treasury, it would be like giving five kids the opportunity to go into citibank and get all your account information and then delegate to elon musk. the decision is about whether you get your money back or the payments are made. so

it's an astonishing delegation by the president to a person who's not elected and not accountable to congress. and my view, that should be upsetting to republicans as well as the democrats. it's not what they call small government. >> i get the sense that you have not heard back complaints from the republicans. or are they just are they complaining and not willing to say it publicly? >> i would say the latter. i think they're the republicans always worried about trump and how far he'll go. but they also know that right now trump has a real grip on their base, and they're apprehensive about what are the political consequences if we speak out too much. >> if this turns out to hurt people in your state, as you say around the country, average americans who potentially voted for trump, too, i mean, wouldn't it seem like that would solve itself if there's pushback on those levels to the administration? is that your expectation? >> you know, it's actually not

my this is the real danger here. the what the president is doing right now can destroy usaid. what he's doing in treasury, he's driven out employees, including the person, the top civil servant who is in charge of about $5 trillion in the payment system. so the process that the president is going through has the capacity essentially to really destroy, not just disrupt, many organizations. and that may be if we wait and don't stop what the president is doing, if he doesn't, i think, respect the proper limits of what his authority should be and have some appreciation of how this is going to have long term damage, then we can really be set back. >> senator welch, i want to thank you for joining us this morning. >> thank you. >> coming up, the potential impact of tariffs on inflation. now check futures this morning actually have firmed up just a bit here. the s&p 500 indicated higher by about seven points. that's a modest pickup of

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vs. t-mobile, verizon, and at&t for your first year. plus, ask how to get the new samsung galaxy s25+ on us. president trump's tariff policies, trying to figure out the potential impact on inflation. steve is going to try and sum it up in one easy graphic. >> good luck becky. >> sometimes i scribble things out on napkins since people ought to stop me. maybe that'll stop me this time. but let me start off tell you two fed. officials yesterday, raphael bostic from. >> atlanta. >> susan collins from boston, saying that. >> uncertainty over. >> tariffs and fiscal policy, along. >> with above target inflation. >> supported the fed's. >> decision to pause. while collins. >> told cnbc yesterday she sees eventual rate hikes, rate hikes. >> rate cuts, she. >> wouldn't commit to reductions this year. >> part of the complication. >> is just how complicated it is to figure out the inflationary effects of tariffs. so let's see

if we can show that to you. if the fed could count on the complete tariffs. passing through to the consumer, it could figure out how much price would rise. there you go. >> you're 25% tariff. direct pass through becomes. >> a 25% tax price increase. but then. >> a. >> whole bunch of other factors. take a look. now stand in the way, all of which matter a lot for investors and consumers. okay. you have the foreign producer exporter could take a hit on their profits, as could the us importer exchange rates. in this case, a strong dollar can offset some of the impact for the consumer. in the us, retailers could take a hit. that explains why we had courtney here earlier today talking about consumer discretionary stocks have been under pressure amid this trade war. okay. you with. >> me so far. yes. >> yep. look at that okay. now easy right. the trouble is once you figured all that out you're not done yet. one other calculation you have to make. let's go back to it. now you have to figure out the weighting of the specific products in the cpi index to know how the

tariffs will raise or lower the inflation rate. you see that? so whatever is less than 25%, that's multiplied by the share. whatever is at 25% multiplied by the share. and that is your overall inflation impact, which by the way, i'm leaving something else out, which is substitution doesn't count. but anyway, that'll tell you. you also have to know how long the tariffs are going to be around, for how long they're going to be there, how much they are, and on what what product now. >> does that account for, how much gets eaten by the manufacturer? >> well, no, that's the whole if you could put if you can you go back to the chart. >> left end. the left end decide. >> is that okay. so look at the bottom. the bottom is all those things that attenuate the farm producer profits take. >> a hit. right. >> the us importer could take a hit. >> the exchange. >> rate can attenuate it. >> yeah. >> the retail profit can come down. so there's all kinds of investor implications in each one of those boxes. right. right. along with what happens to the consumer at the end of the process. now supporters of tariffs, becky, have used these factors to argue that, hey, a

25% tariff is not a 25% boost to inflation, at least by as much as the tariff, and won't hurt consumers that much. opponents look at the entire supply chain and the uncertainty, and they say it creates losses in unknowable places, subtracts value from companies that we can't figure out. and even with that, there's still the potential to pass some or all of the tariff along to the consumer. and, you know, there's even another layer there, which even if a lot of it did or some of it show up in the measured inflation readings, there's a there's a case to be made that people say it's a one time price adjustment that is not ongoing organic inflation necessarily of the sort that the fed, for example, would have to respond to. this is all about figuring out the one time effect on the price level. and then treasury secretary scott bessett has talked about this idea that there is some substitution. if a price goes up here, it may go down over here, or people can substitute away. >> well, and it's also based on the idea that these would be permanent and not something that goes away in three weeks or something along those lines too, which would be even more

complicated. >> exactly. but i think one of the interesting things about this is i know the market does not like uncertainty. it likes to know where the potholes are, where the where the costs are coming from. and when you look at that chart, it's really hard to figure out. and i think the fed is kind of in the same bucket of tell me the answers to all the questions in that chart, and i'll tell you what my policy is, right. >> this is like when somebody asks you, how much money do you need in retirement? well, tell me how long i'm going to live, right? and i can back it up from there. >> so becky, what's the rating of the chart, would you say, on a scale of. i've had some really good ones that you've liked? oh. >> i get it. >> i think. >> it gets it down to a to a input, but i still think it's an unknowable answer because i think there are other factors. >> that it also brings it. it also brings up the question if you have this diffuse impact, what's the point? because honestly, a price adjustment that changes behavior is what this is supposed to be about, right? >> this is like too complex. >> that's a really important point. if you end up having all

of these things that end up mitigating the tariff, it all gets washed out. what are we left with then? maybe there's no point the. >> u.s. government would be left with revenue that you. >> can't have. you can't have it both ways, is what mike santoli is saying. okay, well anyway thanks guys for bearing with me. >> thank you steve. when we come back we're going to talk big pharma companies and their ties to china merck and pfizer both reporting earlier this morning. we'll run through the numbers and talk tariff impact on that sector. and then ark invest ceo cathie wood will join us. squawk cathie wood will join us. squawk box will at&t has a new guarantee. because most things in business are not guaranteed. like a distraction-free work environment. -yeah,i'll circle back around. -get those steps in, kevin. your coworkers keeping things confidential. [phone ringing] oh, she's spilling all the tea. ♪♪ or office etiquette. yeah, that's not guaranteed. i know you can see me! you know what at&t guarantees? connectivity you depend on, the deals you want, and the service you deserve. can i get that logo bigger? or we'll make it right.

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now, jared holds mizuho, mizuho securities america healthcare sector strategist. jared, a tale of two pharma companies this morning. i guess let's start with the one that took a leg down, which was 5%. when you wrote your note. then it was 8%. and where is it now? 7.5%. is that a warranted decline based upon what you heard this morning? jared. >> hey, steve, thanks a. >> lot. >> for having me. i think so. i mean, this merck situation is. fairly murky at best. >> when. >> you consider. their biggest drug. >> is going. >> off patent in 2028. this gardasil issue. which doesn't seem to be under control, and management, had kind of alluded to the fact they thought it. >> was getting. >> cleaned up, but it seems like that's not the case, at least near term. so i think this is just another pharma company that's going to go through some near-term challenges. and i think the street is going. >> to. >> again, you know, come to the conclusion that potentially more m&a is needed to kind of stem the losses here.

>> m&a, which way they buy or get bought. >> they buy. >> just pipeline needs, asset needs. >> as we go. >> through the rest of this. >> decade. >> over the next five or so years, they're going to have to probably continue to buy assets. they've been. fairly acquisitive over the last couple of years. they just did a deal in china, actually in the obesity space. but just given some of this revenue degradation, they're. >> probably going. >> to have. >> to do more. >> jared, for people that aren't pharma bros like myself and don't know what is that drug that comes off patent in 2028. >> that's keytruda, that's their biggest revenue contributor by far. this is a massive blockbuster cancer drug that goes away in 2028. they are working on some reformulations. they mentioned. >> that this morning. >> just not. sure it's going to be enough because this is over 50% of revenue. >> right now. let's put a smile on our faces and talk about pfizer, which went the other way. why? why the big difference

between the two companies? is it endemic to the companies, or is there something else going on? >> not really sure there's that much different actually. i think pfizer, we knew the numbers they had guided towards the latter part of last year. so they kind of, you know, de-risked the numbers de-risked the quarter for us to some extent. stock's basically been flat for as long as i can remember. i don't think this the quarter here the numbers today really portend in a significant way up or down as far as the near term dynamics. they're still going through some situations that stem from covid. there's still some contribution in the numbers from vaccines and other covid treatments. i think the street will probably wash those out. i think this is another situation in which they have to prove to investors that the pipeline is significant, that they can cut costs if revenues decline. but over the next couple of years, it's probably okay. we're looking more into the. out years.

>> where there's risk here. >> so jared, that's fascinating. so you're really saying to me that the different reaction this morning is all a matter of guidance leading up to the earnings reports and how they steered the market. so one did a good job of telling us what happened. one did a poor job and each one pays a different price on that day. >> i think. so, yeah. i mean, i think that what you're seeing in merck. >> is, is. >> essentially a reflection of downside surprise related to gardasil in particular. you know, this has been one leg of the story that's been under scrutiny for a couple of quarters. >> and there's. >> been some expectation cut you off before we lose time. jarrett i'm sorry, but give us something good that's going on that you're excited about in this sector. >> well, i think what could be good is just to get a little bit of clarity on what is actually happening in washington. we'll get more this week with rfk potentially getting in there. some other big hires on the fda side. et cetera. so once i think we get the washington situation cleared up, that could pave the

way for more clarity here. >> are there any particular companies that you're when you get up in the morning, you really want to know what they're doing that you're excited about? >> well, i think lilly i mean they're going to report later this week. i mean, that's been the best name in pharma by far. i mean, we're going to see what they have to say about their obesity pipeline through the year. that would be the one. >> jared, thanks so much for joining us this morning. interesting story and great take on why the difference between the two companies this morning. >> you bet. >> thanks. >> it is. >> just after 8 a.m. on the east coast. and you are watching squawk box right here on cnbc. i'm becky quick along with mike santoli and steve liesman. joe and andrew are off today. among our top stories. china launching an investigation into google, the country's state administration for market regulation, saying that the us tech giant is suspected of violating china's anti-monopoly law. that announcement, coming alongside chinese retaliatory tariffs on u.s. goods that were

sparked by president trump's new 10% levy. of course, google the search engine, hasn't operated in china since i think, 2010. separately, china's commerce ministry saying it can pull calvin klein, parent company pvh and biotech firm illumina on its unreliable entity list. the ministry said that the companies took, in its words, discriminatory measures against chinese enterprises. companies on the blacklist can be subject to fines and or other sanctions. but again, these are being kind of described as low level retaliation, not major moves that the chinese could make if they were really trying to make a point. by the way, one earnings mover for you this morning to keep an eye on pepsico reporting mixed fourth quarter results. shares are down on that news by about 2.1%. pepsico says that it sees core earnings per share growth this year in the mid single digits. the street was looking for 4.6% growth on that metric. >> all right take a look at the

futures this morning. kind of hovering not too far from the flat line. you see a little bit of a boost in the nasdaq. a big positive surprise by palantir might be helping that out. the dow is indicated lower by about 79 points. treasuries actually the yields lifted throughout the day yesterday after an initial decline on the tariff news you see here the ten year at 459. it has not gone below that 450 level. and the two year note is back above four and a quarter. let's get to dom chu with a look at this morning's premarket movers. hey, dom. >> all right. >> so mike. >> becky steve. >> let's start with that earnings story on. palantir driving up some of that tech sentiment. those shares right now up. about 22%. after posting earnings and profits that beat. >> estimates in the fourth quarter. >> the company, though, also offered strong guidance, with current quarter and full year sales forecast coming in well above expectations. the software company projecting sales to grow at least 54% this year. >> now. >> in. >> the. >> earnings release. ceo alex karp said that the results demonstrate the company's. >> deepening position.

>> at the. >> center of the. >> ai revolution so that ai upside is driving a surge in palantir shares. also on the tech side, media side spotify shares making gains before the opening bell. shares right up around 8.5%. the streaming audio giant posted a q4 revenue number that beat expectations and reported its first full year profit in its history. total monthly active users also increased to. 675 million. the company said it expects to add another 3 million in the first quarter. that number coming in above estimates. so a lot of that driving the positivity on spotify. and let's end internationally on spirits because it's 5:00 somewhere. diageo is down right around 1% after reporting some of its results. the losses are coming after falling to its lowest level since march of 2020. over the last couple of weeks here. the spirits maker withdrew its medium term guidance due to macroeconomic and geopolitical uncertainty. the company's ceo also said the prospects of tariffs could hamper its ability to recover falling sales and

diageo earnings. the company's cfo said that us. >> tariffs could result. >> in a $200 million hit in the firm's second half operating profit, and then. >> analysts at jefferies. >> estimate that almost. half of the company's u.s. sales are actually derived from imports from mexico and canada. that includes tequila brands like don julio and casamigos as well. so becky, diageo, a big focus here, down 1%. i'll send things. back over to you guys. >> yeah, not nearly down by as much as it had been before. so 1% not looking bad relative to what we'd seen, i suppose. >> and some of the tariff rhetoric and walk back. >> and. >> negotiation probably plays into that as well. >> yeah, i think so. don thank you. when we come back, three big interviews you don't want to miss with ark invest ceo and tesla bull. cathie wood, republican senator tim scott on this week's banking hearings in washington. and former canadian finance minister chrystia freeland on president trump's tariff threats and what she sees as the response. stay tuned.

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already asked for a budget reminder. >> smart buy. >> got it. >> got it. boss otter, you got this. >> ark invest is out with its big ideas of 2025. there are 11, all related to technology. joining us now with more on her 2025 strategy and how tech could perhaps get caught in the crossfire of president trump's trade moves. cathie wood, ceo and cio of ark invest. welcome, cathie. good to see you. i guess i would start by saying, for one thing, you know, the market has been pretty captivated by a lot of these disruptive technology themes, whether it's the ai infrastructure build out. obviously, crypto has had an incredible run. now tesla naturally is has had been on a roll in terms of excitement about autonomy and robotics. so

what do you feel is left? what are the ripe ideas that you would like to be positioning for at this point? >> well, i think that the ai movement has just begun. and, you know, we've been moving away. >> from more hardware centric tech. infrastructure and so forth towards software. >> palantir is a. >> very expensive. >> stock, but. >> there's nothing like it in the software space. >> it is. >> we believe, going to dominate. the biggest part of the tech. >> stack when. >> it comes to. >> ai. and that's. >> the platform as a service part. >> of the stack. so very excited. and again, if you if you think about the ai revolution we are today, where we were when it came to the internet in. >> the early to mid 90s. so again, we've just begun. >> and so. >> we have miles to go. and then of course. >> the applications. >> tesla. not only do. >> we have. >> robo taxis. >> but now humanoid robots.

>> and so. >> to give you a. >> sense of slowly, slowly, then all at once, we. >> certainly think with. >> tesla robotaxi. >> is this year. >> i know that elon has been saying. >> that it it was. going to be just around. >> the corner for the past 6 or. >> 7. >> years. >> and we thought it. >> would be sooner. >> but it is here. that is a huge opportunity. what's happening. >> faster than we expected. is the humanoid robot opportunity tesla. in the in the public markets certainly figure. i think in the private markets we own those in our venture fund. so lots and lots of excitement. >> around ai. >> yeah. i mean, you mentioned, of course, that, you know, you thought that the autonomous implementation for, for tesla might have happened by now. i mean, obviously, you know, there have been these optimistic projections. i was looking back in five years ago on your website, you thought that 2024

tesla car sales would be 3.2 million as your bear case, and they were 1.8 million. so obviously it's hard to project five years forward. why is the world ready to pay up for many, many robots, actually? >> so it's that. >> time period. >> is very important. >> mike. >> did we know about covid? our forecasts hinge hinge importantly. >> on unit. >> growth and everything stopped during covid. >> i think. >> in terms of our forecast. >> on evs. >> we were much closer to the mark than most other analysts out there. certainly in terms of surprises relative to expectations, which drove the stock importantly. >> one other thing. >> just in terms. >> of big ideas, i think the. most underappreciated. application of ai is health care. i think health. >> care is responsible for an incredible amount of storage out there. >> right now. data is. >> the name of the game and health care. >> we've got 37.

>> trillion cells in our body, and they're going. >> to be sequenced. >> as we're looking for cures. and so while robotaxis might. >> be the. >> biggest application, short term, $10 trillion in. >> the. >> whole ecosystem over the next 5 to 10 years, we think the most profound application is in health care and that it will lead. to curing disease. >> it already is. >> the market seems to, whenever it does, kind of get enraptured with these big themes, want to have kind of a bellwether, clear play, whether that was certainly tesla and evs, nvidia in the ai infrastructure buildout, is there something comparable in the medical applications of ai? >> well, i think you have to. >> look at the sequencing technologies. that's where it's starting. so the illumina's, the pacbio's. but in terms. of in terms of research. >> in ai. >> there are a couple of names.

recursion pharmaceuticals has just in one year thanks to ai and i think. 1500 gpus. so very few relative to what we're seeing elsewhere, has driven the average number of hypotheses per researcher for. >> new. >> drugs, up ten fold in just one year, from 20 to 200. to 200 per researchers. >> so we think that. >> research and discovery is going to be impacted incredibly. >> and we also think. >> that phase one and phase two drugs, which get very little love in the marketplace these days, especially phase one and anything preclinical that now that ai is speeding everything up, we're going to see more value placed on those because the number of failures is going to drop and the time to market is going to accelerate. and we think cures are going to increase the value of patents. and this is not what the

traditional world thinks by anywhere from 2 to 20 fold. because if we're curing disease, if we're curing disease, then we won't be falling off patent cliffs. and i do see illumina getting hit today by by the china announcement overnight. illumina is the premier short read sequencing company, and that's going to be very important in the blood tests that help us discern whether we have cancer or whether it. >> is recurring. >> any sense of why illumina was one of the very few companies that china decided to target? >> you know, i know that the sequencing technology in china has improved quite a bit. i know they don't want to disadvantage themselves, and they want the leading edge tech. so they may feel. that they bjh, bgi and some of their other companies are up to speed. we do think

under new management, illumina is accelerating the pace of change. finally again including take driving costs down big mistake it made and giving china a way to catch up was just holding prices at $1,000 per genome. now we're down to roughly $200 per genome, and we think that's ultimately going down to $1 per genome. >> kathy, when you take a position like you have with tesla, how much is that based upon the idea that you have a guy like elon musk at the head of all that stuff? >> well, we have a six point scoring system, and the first score is management, management. people and culture need a visionary management, especially when it comes to innovation these days, because these companies need to invest aggressively, as tesla did in 18, 1920, in order to capitalize on massive opportunities. and in fact, with ai, it's winner take

most opportunities. so they need to stand up to more traditional investors who want their dividends, their profits, their share repurchases now. so you'll not find many of those stocks in our portfolio. you'll find stocks like like tesla. >> so does it bother you that the head of tesla seems to be spending most of his time kind of involved with the federal government? is that a knock on your sense of the outlook for tesla, or do you expect elon musk to come back full time to running his companies? >> yeah. >> so as i said, the score the first score is management. and we look carefully at what management is doing, how management is spending its time and how a visionary leader like elon musk is surrounding itself by brilliant people who want to solve very hard problems. if you had listened to tesla's last conference call last last week,

you would see how focused elon is on the any pain points or bottlenecks. so he's highly focused on getting this autonomous taxi network up and running this year. clearly, he's maniacally focused. it seems to me more than i understood before listening on humanoid robots. we've in our big ideas. you'll see a section on humanoid robots, and we think that humanoid robots are going to benefit small companies more than large companies, which is a big change. but as far as elon spending time making the government more efficient, i'm actually thrilled. and there's something that people do not understand about elon. ellen understands that we are in the midst of a massive convergence among technologies, and that ai is the biggest catalyst among

the five major innovation platforms evolving now. so robotics, energy storage, ai, blockchain technology and multiomic sequencing. he understands those convergences. he's involved in three of them, and data is the name of the game. if you look at all of his companies, they're all spewing out different kinds of data. that's proprietary and that's the name of the game in terms of winning all kinds of ai races out there. and of course, the government is filled with data itself. i don't think that's why he's there. he's there to make it more efficient. and we're thrilled. >> yeah, well, of course, we already have discussed whether, in fact, it's correct that he has direct access to some of this data. that's going to be, i guess, sorted out in a in a separate venue. just quickly, though, kathy, when you mentioned blockchain, it seems as if the latest run and wave of excitement over crypto has mostly been about owning it as an asset, and that the trump administration is going to be more friendly in terms of

allowing more products and essentially not trying to prevent people from from selling it or getting involved. it's not as much about what's going to be done with the technology or creating some kind of a platform, is that right? >> i don't think so. actually. there is stablecoin legislation going through or we think it will go through, led by senators lummis and gillibrand. and i think this administration is very supportive of that legislation, including stablecoins. what's interesting about stablecoins, if you look at the transaction value on the various blockchains out there, the stable now account, the transaction value is higher than either for visa and mastercard. i think many people are very surprised. now, i want to clarify the value, the count, the number of transactions is

much greater on visa and mastercard and mastercard, but the high volume transactions are taking place on these other networks. so defi and we're going to stop calling decentralized finance defi. probably it sounds a little defiant. it's nothing but the internet financial system. it's the layer of the internet. now finally built to accommodate financial services and commerce. so i think it's already the, the, the innovation is burgeoning out there. and so and it's interesting to make this more familiar to people and to help them understand what this is. i heard from someone in india that they're calling it the internet. there again, this is the internet, the next generation internet. so pretty excited about it. >> hey, kathy, part of the reason that you all have done so

well since the election is your big ownership in things like bitcoin and tesla that obviously have taken off since president trump was elected. elon musk is such a unique and amazing individual from all the companies that he's been able to create, from what he sees, kind of the focus that he has, his ability to multitask with incredible focus. he's also been incredibly good at walking a fine line with multiple administrations, whether that be in the united states and in china. it's a pretty rare talent that maybe tim cook is the only other person i can think of who has walked such a fine line and done it so artfully, these chinese retaliation that we've seen this morning. obviously, small companies, not things that are really going to have a big impact, companies that don't do a whole lot of business in china to begin with. if they were to get more serious, if things were to really ratchet up between the trump administration and china, and china chose to retaliate by going after an apple or a tesla, would would that shock you? and

what what would you do to either protect yourself ahead of time or as a result? if that were the case? >> i think china right now is very focused on something, a phrase called new productive forces. and that's all about innovation because they're trying to pivot from a very big problem they have, which is in the property sector. so i don't think that a xi jinping will want to derail the momentum on innovation. and it's very interesting. i think we're surprised that when it comes to robotaxis, that china has been more forthcoming with china, i mean, with tesla, sorry, with tesla than we expected in our model for tesla. we did not expect much share of the robotaxi market going to tesla. but i think what's going on while baidu's apollo is making progress and so forth, it's

still rather geofenced. china wants to learn from tesla and from western companies altogether, and all kinds of technologies how to go about and break through into this new age with, in this case, robotaxis. so i'd be very surprised. and, you know, elon also has another secret weapon in china. his mother, maye musk, she is beloved in china, which is another big asset. >> interesting kathy, appreciate you running through it with us. thank you very much. >> pleasure. thank you mike. thank you steve. >> coming up where apple fits into president trump's tariff threats. plus we'll speak to the former canadian finance minister, a current candidate to be prime minister on this week's tariff drama. stay tuned. you are watching squawk box on cnbc. >> the most challenging. >> engineering project in the history of the human. race is our nation.

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>> apple coming off more than a 3% drop to start the week. for now, the company is keeping quiet on tariffs, but they could have a significant impact on apple's businesses. for more on this, we want to bring in our own steve kovach and steve. good morning. >> good morning. yeah. >> this. >> is an. interesting one here because apple has a few options how to get around these tariffs. of course they can always fight for exemptions. but let me break down what they're facing right now. now that these tariffs have gone into effect they could of course raise prices for their products here in the united states. or they could absorb those costs. another thing that folks are talking about over the last couple of days is diverting their manufacturing as much as they can, either in india or vietnam, to import those products from those countries instead. but look, none of that is going to be enough to mitigate the. >> entire effect tariffs.

>> would have. i was emailing a bit back and forth the last few days with eric woodring over at morgan stanley. he's one of the axes. on apple. >> he predicts. >> about a 3% hit to earnings. >> if these. >> tariffs do go into full effect. >> and then. >> gene munster, our friend over at deep water management, he also noted on the manufacturing front, about half of apple sales are manufactured in china. that includes 85% of all iphones. india. we talked about that so much during the pandemic. with apple diverting some manufacturing over there to divert there to diversify their supply chain just 10%, according to gene of revenue is built in. >> india. >> though, so they. apple could still of course fight for exemptions, maybe offer trump something like an investment in the united states like they. did last time. trump, in fact, teased that apple would be announcing a major investment in the united states soon. but apple has not commented on that. and then, of course, we come to that inauguration moment a couple of weeks ago that. apparently wasn't enough. tim cook himself personally donated $1 million to the inauguration

and sat behind the. >> president during. >> his swearing in, along with those. >> other tech executives. the idea. >> there, this kind of cozying up to trump among with cook and his peers in the big technology companies would kind of. >> ease trump's. >> attitude towards them. but so far, that doesn't appear to be happening, and there doesn't appear to be any exceptions to these guys. and to your point earlier, becky, you're talking to cathie wood about what could apple do to retaliate? tesla is a good target. apple is another great target too. apple is still trying to launch. apple intelligence. >> in that country. >> they need that to grow their iphone sales. >> sales in china were down 11%. >> in the. december quarter. they need. >> some. more strength in china. >> and they're not getting any help right now. >> i mean, i guess for china, it's a double edged sword, too, because there are so many manufacturing jobs in china that are reliant on apple, they're not going to want to cut off their nose to spite their face. >> exactly. there is a symbiotic relationship there. but and especially during the holiday season. >> they. >> literally train in thousands and thousands of workers to

these foxconn factories. and they have these somewhat temporary jobs. so yes, it is huge for employment. >> we know china. >> has been struggling. there's also stimulus coming too. >> so that. >> is also driving some sales for chinese branded smartphones. there's this competition and kind of a. >> nationalist effect. >> that we've been seeing over the last couple of years with huawei coming out with phones, taking away share from apple. and i get the. >> sense that this is still a negotiation with these tariffs. exactly. so it's hard to draw any hard conclusions. >> nothing's happening until it happens. >> of course, and that there won't be exemptions or that there won't be carve outs. >> but if. >> this does happen, let's. >> say there. >> aren't any carve outs. let's say it continues for. >> like jumping straight to the worst. >> case scenario, jumping. >> straight to the worst. >> case scenario. analysts are predicting 3 to 4% hit again. can cook convince trump to give him some kind of exemption like he did last time? >> and how that happens. >> i was with tim cook last week in cupertino talking to him about these earnings reports. and of course, one of my first questions was, has the president indicated to you in any way you're going to get exemptions? and he would not take the bait on that one? he said, we're just

monitoring the situation. >> well, he's a smart man. >> he's a very smart man. he did it really well in the first term. i think he's doing it again now. >> steve. thank you. thanks, guys. >> okay. coming up, south carolina gop senator tim scott joins us on today's debanking hearing in washington. the idea for this was sparked when president trump called out bank of america's ceo at the world economic forum. do you remember that? stay tuned, squawk box. we'll be right back. (vo) weight loss is changing. for so long, i felt stuck on repeat. i tried, and tried again. lost weight, gained it back. but zepbound means change. zepbound is for adults with obesity, to help lose weight and keep it off. activating 2 naturally occurring hormone receptors in my body, zepbound works differently. it's changing what i believe is possible when it comes to weight loss. it's changing how much weight i lose. up to 48 pounds. and it's changing what happens.

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here first. >> a wild hour of earnings. >> earning

authenticated luxury resale. shop now with code tr20 for 20% off. >> terms apply. welcome back everybody. president trump called out bank of america ceo brian moynihan and jpmorgan ceo jamie dimon at the world economic forum last month, saying conservatives complain banks are not allowing them to do business. both those companies have denied that they make banking decisions based on politics. but following that exchange, the senate banking committee called for a hearing on so-called d banking that's going to be taking place tomorrow. and joining us right now to talk about it is senate banking committee chairman, senator tim scott. senator, first of all, thank you for being here. second of all, why don't you explain why you're holding these hearings? >> well. >> i actually announced this part of my agenda in late december that there was a need for us to take a. look at the d. >> banking strategies.

>> that was used by the biden administration. think about it. this is black history month. i grew up in the deep south. i understand. the unbanked. americans are so often. minorities because there was redlining. back when i was growing up. the good news is today. >> is less. >> about black and white, but unfortunately, today is more about red and blue. the politicalization the weaponization of our banking system should never happen. if you are politically disfavored under the biden administration, we saw cryptocurrency targeted, other digital assets targeted, the oil and gas targeted, the firearms industry is targeted. and individuals from melania trump and beyond. so i've gotten. over a thousand calls from people around the country who say they have experienced some debating. so tomorrow we'll have an opportunity to hear from all glory bank and what they went through and why they existed, to try to find a way to provide resources, financial resources to those who had been debanked. we'll hear from

anchorage digital so that they will talk about the process that they experienced under the occ, and experts who can speak clearly about the importance of treating all americans exactly the same, no matter whether you're democrat or republican, whether you're liberal or whether you're conservative. >> senator, i hear a little bit of conflicting points of blame in what you just said at the beginning. you said it was the biden administration and the regulators who were doing this. at the end, it sounded more like, well, maybe the banks are choosing politics on some of these issues. let me read you back a response from jamie dimon, who put this pretty succinctly. he said, we are responsible in the law to fight sex trafficking, money laundering, tax avoidance and basically regulators to, he said. he said the regulators put a lot of pressure on us and tell us what is high risk. if we don't bank someone and something goes wrong, it could be hundreds of millions of dollars in fines. so a lot of banks are kind of guessing, like, we should get rid of these people. we're not

allowed to tell you why we debanked you. so they will point back and say that it is the regulators who are putting pressure on them and who have pretty vague laws, and that they are not. therefore, as part of those laws, allowed to tell people why they're debanked. >> well, becky, there's no doubt i spoke to the bank policy institute a few weeks ago, and one of the things that they said collectively was that the occ under biden administration put so much pressure on them that their reputational risk wasn't in the in the in the competitive market. it's really with the regulators. think about that. the weaponization of our regulatory state against our financial institutions. at the same time, about 18 months ago, i spoke before a lot of the large g-sibs as well, and they talked about their decision to not bank certain industries because of the environmental impact. so having a conversation about the importance, if it's legal in america and you do not have a business reason to not

bank someone, then you have a responsibility to do so. next week, i hope to have a larger, broader conversation with more ceos about this really important topic. >> senator, do you feel like you have the expertise or the senate has the expertise to supplant the expertise of bank supervisors when it comes to the issue of the extent to which some of these banks should or should not be involved and have crypto on their books? there was a, as i understand it, a consent order between anchorage digital bank and the occ that seemed to deal with this. the supervisory. is that discrimination or is that prudence? >> well, the question that you asked should be answered simply. do we have the responsibility of oversight? the answer is emphatically yes. are we thankful that the biden administration has gone and the trump administration is here 1,000%? am i excited about scott bassett and the team he's going to assemble over our financial regulators 100%. we are heading

in the right direction. so will i have more information to do a better job of oversight? absolutely. have i had really important conversations with financial institutions about the weaponization of our banking system against their customers? the answer is yes. well, i have more information at the end of tomorrow, 1,000%. >> yeah. senator, in the meantime, let me ask you about this new proposal that was brought up yesterday, the idea of creating a sovereign wealth fund. scott bessent, treasury secretary, i guess going to be in charge of that. and really looking at, i think, as he put it, you know, taking some of the assets that we have and monetizing them. what do you think about that prospect? >> well, i've talked to a number of people yesterday about the important decision of a of a sovereign wealth fund. i think it's a great idea. i think the important part from my perspective is governance. how do we construct the kind of board, the governing board, that makes sure that this is not

weaponized during this administration or the next administration? but what we focus on is roi. that means you have to have a team of experts doing what we see at the pith. we see really good examples in norway, saudi arabia, dubai that have done a really good job with these sovereign wealth funds. the question is, will we have the type of governance over it so that no matter who's in office, whether it's trump or someone else, that the focus is on roi and not specifically someone's political agenda? >> yeah. senator, you mentioned three countries that have massive surpluses based on their resources, and they're trying to use the sovereign wealth fund to diversify that because they have essentially too much money coming in to kind of put to work within their their own country or in other ways. that doesn't seem to apply here, isn't the big question where's the money come from? are we going to fund this? you know, out of, you know, out of the annual budget? what are we actually what's going to be in the fund? >> well, that's a good question.

i think the president will have an opportunity to answer that question. but if you think about the decisions he's making and the signals he's sent, whether it's tiktok or the panama canal renamed the american canal, what we do know is that having an opportunity to have that serious conversation about investing in america's future is a really good opportunity. what we do know is president trump is a visionary leader, and he's going to bring to the table things that we haven't considered before that can produce a better roi for the american people. and so how do we figure out how to do it? the good news is we have the world's best in our nation, and we will have if we go forward with it. i think a very competitive position. >> and senator, just real quickly, you don't worry about the us government having large stakes in private corporations. well. >> once again, we have to allow the governor, governors of this entity to be a serious part of the conversation. and how they invest. where they invest is incredibly important. what we

know today is that we have trillions of dollars being invested through the through our 401 s that flow through the government. so there is a way for us to have a conversation. i think it's necessary. we'll see what turns out over the next several months. this may take a little longer than that for this to happen, but the good news is president trump is he made promises on the campaign trail. he's keeping those promises. and it allows us to take a look at where america is in every facet of our economic lives. and hopefully, we'll be back to have another conversation about why did this go so well or what were we thinking? so i'm happy to come back and have that conversation over the next several months. >> senator scott, we always appreciate your time. thank you for joining us today. >> thank you becky. >> you have a great day. >> bye bye. >> you too. >> coming up, the us-canada trade relationship under the microscope. we'll speak with former canadian finance minister chrystia freeland on president trump's tariff threats and pullback yesterday. stay tuned. pullback yesterday. stay tuned. you're watching squawk box on business.

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closing soon. >> president trump pausing tariff threats against canada and mexico. hours before the levees were supposed to take effect on x, canadian prime minister justin trudeau wrote that his country will reinforce its border with the u.s. he said canada will appoint a fentanyl czar, lists drug cartels as terrorists, and launch a joint u.s. canada team to combat organized crime. joining us now, former canadian finance minister chrystia freeland. she's running to be canada's next prime minister. thanks for joining us, christine. >> great to be. >> with you, steve. >> so can you help us understand what happened? i've got two stories in front of me today. one is that the canadians and the mexicans gave in to

president trump's demands. and then there's a story in the journal today that says they didn't really president trump didn't really get very much. from your perspective, what actually was given by each side? >> well, from my perspective, steve, what. >> happened is. >> common sense prevailed. >> you know, the wall. >> street journal. was absolutely. >> right in. >> saying this. >> is the dumbest trade war in. >> history. and markets sent. >> a very strong message yesterday. they said this will be bad for the american economy. and we heard the same thing, really, basically, from everyone who has anything to do with the us economy, right? we heard it from the chamber, we heard. >> it from. >> manufacturers, we heard it. >> from the aluminum sector. >> we heard it from the farmers. >> we heard it from blue. >> collar workers. we heard it from the steelworkers. everyone said, this. >> is a really bad. idea because our trading. >> relationship with canada is mutually beneficial.

>> and then i think you guys. >> got the. >> message that canada. >> would retaliate. >> and that. >> is very. >> important to be clear about. you know, our. country is. more united around this than we have. >> been in. >> living memory. we want. >> a. >> great relationship with you guys. we think we have a great relationship with you guys. >> but if you. >> hit us. >> we will definitely. hit back and that will make a really. >> dumb idea, even dumber. >> so i think at. >> the. >> end of the. >> day, what. >> happened was american. >> capitalism worked. the us stock market sent a powerful message. i'm grateful to american capitalists. >> for being. >> smart, for sending that message. right. and i'm glad that message was heard. but the. >> threat. >> is still there. it's still lingers, right. >> and that's a. >> really bad thing for americans and canadians. >> our understanding was that you were disappointed in prime minister trudeau's placating

president trump. are you disappointed in his response yesterday and what he appears to have given president trump? >> not at all. >> our whole country right now, every single person is absolutely united. we are totally supporting. >> the. >> prime minister in the great work he is doing and. the great. the great. outcome that we had yesterday. >> and what we. >> really need now is to get to a place where the tariffs are definitively off the. >> table. >> because as long. >> as. >> that threat is. >> hanging there. >> it's bad for everyone, it's bad. for the us economy, it's bad for us workers, it's bad for u.s. businesses, it's bad for the car sector. so i think what we all really need to focus on is we need to say a good result yesterday. and now let's move this totally off the table and get back to an effective, mutually beneficial

relationship. >> you know. >> ronald reagan said about the canada-u.s. relationship that it was the most productive relationship between any two countries in history in the world. he was right. >> kristen, we've had a lot of our president has discussed a lot. this issue of the us canadian trade deficit, which we had a discussion this morning. one gentleman talking about the goods deficit i threw in the trade and the services, trade and goods and services together at about $40 billion in 2023 plus or minus something this year. how significant is that in your mind in context of the whole relationship a $40 billion trade deficit. do you believe do you agree with president trump, that canada has been unfair to the united states? >> no. >> absolutely not steve. >> look, the reality. >> is our trading relationship is balanced and mutually beneficial. and if you exclude energy, if you exclude. oil and

gas, electricity from that trade, then it is basically balanced. in fact, some years you guys run a surplus with us. now. >> i. >> think you are really lucky that canada is the country that sells you oil and gas and electricity. >> we are. a much more. >> reliable supplier than, say, venezuela. and the fact is, particularly with i, america's needs for energy are only going to increase. so i think you should be saying to us, hey canadian friends, thanks a lot for being such a great partner. thank you for being a reliable democracy, a nato and norad ally that is going to help us have. >> the energy. >> that we need to dominate in the ai space. and i will also say, steve, that. >> you know. >> there is a. danger here for the us, and that is if canadians are really angry. this has been

a. weekend where basketball games, hockey games, the us anthem has actually been booed. i do not remember that in my lifetime. we feel hurt. we feel betrayed. we will retaliate if we have to. but you know, we want to be your friends. we know that this relationship works. >> and you. >> know, you should be glad that you have us as a reliable energy supplier. as finance minister, i got a pipeline built to the west coast for oil. we do have alternatives. we prefer to be. >> your ally. >> and partner, and for that to be the foundation of north american economic and national security. >> but you're making. >> it hard for us by threatening to punch us in the face. >> yeah, well, that's exactly where i wanted to go there. you mentioned how united and unhappy

canadians are about this. now, with the trump administration's relatively hard line trade stance globally, there's been a lot of talk of, you know, european allies are thinking about trying to, you know, disengage a little bit or find alternative trade relationships. same thing with china. mexico is that and you said canada has options. is that is that really something that seems like, you know, this is a signature moment where where canada will look to become a little bit less integrated economically with the us, or is that even possible? >> well. >> look, steve, i. >> really want to emphasize i am an optimist. i believe. >> a win win. >> outcome is possible. >> and i'm not. >> like a crazy pollyanna. >> here, because i. >> was foreign minister responsible for the canada-u.s. relationship during the first trump administration. and you will remember, there was a lot of rhetoric. there was a lot of noise. there was a lot of shouting. not nice things were

said. but at the. >> end of the day. >> we got to a great place. we got to a new trade agreement, the usmca. president trump said it was the best trade deal ever, and nancy pelosi and the democrats backed it, too. >> so i really. >> want to emphasize for everyone, the fundamentals between our two countries are very strong, are mutually beneficial, and i think we can. get to that. but i would say to americans, don't take canada for granted. you are. lucky to have us as your neighbor. you're lucky to have us as your energy supplier. the fact. >> that. we are. >> your nato and norad ally and are. a safe and prosperous country all along your vast northern border, is foundational for america's success in the world. so please remember that don't. >> punch us in the. >> face and we can have a good deal. >> chris, you have 30s what happens 30 days from now? tariffs or no tariffs? >> we are.

>> going to be fighting very, very. hard for a no tariff outcome. and steve, i. >> hope you. >> and us business. >> leaders will fight. >> for that too, because it makes sense for both countries. >> chrystia freeland, thanks for joining us this morning. >> great to be with you. >> when we come back. >> we will get you set for another big day in the markets. the futures this morning, at least at this point, are a bit of a mixed picture. the dow futures are still off by close to 90 points. s&p futures have turned positive up by just over a point. the nasdaq indicated up by 27. stay tuned. you're by 27. stay tuned. you're watching squawk -what've you got there, larry? -time machine. you gonna go back and see how the pyramids were built or something? nope. ellen and i want to go on vacation, so i'm going to go back to last week and buy a winning lottery ticket. -can i come? -only room for one. how am i getting home? sittin' on my lap like last time, ronald. fine, but i'm bringing this. [ whirring ] alright. or...you could try one of these savings options. the right money moves aren't as far-fetched as you think. there it is. see?

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luxury resale shop now with code tr20 for 20% off terms apply. >> all right. let's take one more look at the markets. s&p is at the flat line nasdaq indicated up by about 23 points. the dow futures indicated down by about 90 points. of course this is a little bit of a you know come back to reality after. >> a little bit. yeah we're still in apprehensive wait and see mode. i think birx decline is probably having a bit of influence on the dow. and then of course, palantir is a boost for software within the nasdaq at. >> this point. let's take a very quick look at treasuries. you'll see right now that the ten year is sitting at 458. the two years at 426. and then oil prices have come back down significantly yesterday after concerns yesterday, if there were to be

some tariffs that were placed, especially on canada. right now wti is down by about 2.7%. 7119 is the last tick. >> maybe chrystia freeland's right and common sense will prevail, whatever that is. >> i think it has to at this point. i think we are steve liesman and mike santoli. thank you guys both for being here. we'll see you right back here tomorrow. right now it's time for squawk on the street. >> good tuesday morning. >> welcome to. >> squawk on the street i'm carl quintanilla. >> with jim cramer david faber. >> at post nine. >> of the new york stock exchange. >> futures are mixed. >> yields up as. china retaliates a. >> little with tariffs on american oil, coal, nat gas. some ag. >> equipment earnings get more attention today with. >> some lower guidance. and firms like merck. >> and pepsi. our roadmap begins with the trade. tit for. tat china does hit back with tariffs on the us. including targeting energy and google plus. >> we're keeping an. >> eye on shares of palantir. >> why? >> well they are. >> surng